China's Zijin to revise Peru project
HONG KONG (Reuters) - China's second-biggest gold miner, Zijin Mining Group Co Ltd (2899.HK), will delay building and scale down spending on its Rio Blanco copper-molybdenum project in Peru, its chairman said on Monday.
The revised plan would be more economical and environmentally friendly, said Chen Jinghe, after three towns in northern Peru voted in September against the project amid fears it would pollute rich agricultural lands.
"We are revising the development plan of the project," Chen said at the Reuters Global Mining Summit in Hong Kong, adding the start-up of the building of the project would be delayed. He declined to give a time frame.
"The scale of investment may fall, but the outcome could be better," he said.
Production at the Rio Blanco project, which has been priced at $1.4 billion, would be maintained at 200,000 tons of copper in concentrate a year as originally planned, Chen said.
Zijin said on Friday its 2007 net profit rose 50 percent to 2.6 billion yuan ($366.2 million) helped by increased gold, copper and zinc production. ID:nHKG367860
But Zijin shares dropped nearly 12 percent in Hong Kong on Monday, caught up in a global sell-off and hit by market disappointment at the lack of a 2007 dividend payment, brokers said. In late trade, the stock had recovered to HK$9.73, a fall of 3.5 percent.
Chen said gold had contributed about 60 percent of Zijin's 2007 profits, and that rate would rise in the future.
He said the company may buy a majority stake in a large gold project in the Philippines, adding he was waiting for approval from the Chinese authorities. He gave no details of the acquisition, but said the investment would cost a few billion yuan.
Zijin was also in talks to buy an overseas gold mining project and may announce details soon, Chen said, declining to provide a location or size.
The company's gold mining project in Mongolia would start production in the second half of this year and would produce about 500 kilos of gold a year.
He said Zijin would start building a zinc mine in Russia's Tuva Republic in the first half of this year, which would produce more than 50,000 tons of zinc in concentrate a year. The mine also contained lead and copper.
Zijin is chasing overseas mining acquisitions because very few big mining projects are available for acquisition in China.
The firm obtained approval from the government in December to launch an initial public offering in a Shanghai issue that could be worth $2.3 billion. Chen said the firm was waiting for final listing papers and would use the funds for overseas investment.
Last month, Zijin and Bank of China signed a 10 billion yuan ($1.4 billion) strategic cooperation agreement on project financing worldwide.
Currently, Zijin fully or partly owns five overseas mining projects and more than 30 mines in China, with reserves of 638 tons of gold, 9.37 million tons of copper, 3.19 million tons of zinc, 520,000 tons of lead, 670,000 tons of nickel, 100,000 tons of tin, 310,000 tons of molybdenum and 151 tons of platinum and palladium.
It also holds reserves of 168 million tons of iron ores, 300 million tons of coal and 44 million tons of bauxite.
This year, Zijin plans to increase its gold output by almost 10 percent to 57.3 tons. Its copper production would rise by a quarter to 59,000 tons, while zinc production is likely to dip 6.4 percent to 149,000 tons, the company has said.
($1=7.1 yuan)
(For Summit blog: summitnotebook.reuters.com/)
(Editing by Ian Geoghegan)
