* JX open to buying interests in mines from other firms -
* Desirable mine size for investment is 50,000-200,000 T of
annual copper output
* Sees Australia and Canada as attractive places to spread
By Yuka Obayashi
TOKYO, Sept 19 JX Nippon Mining & Metals Corp
will focus on development of its own copper mines in South
America but may also look at buying stakes in other projects as
Japan's top smelter aims to cut its dependency on major miners
for ore, a senior executive said.
Japanese copper smelters are stepping up acquisitions of
upstream metal assets and development of copper mines to hedge
against any increase in ore prices as their profit margins on
JX Nippon Mining is aiming to raise the volume of copper
content coming from its own mine interests for refining to an
annual 250,000 tonnes in 2015 and then to 350,000 tonnes by
around 2020, its parent JX Holdings Inc had said in
March. Around 100,000 tonnes of in-house copper content in
concentrate was used to refine metal in 2012.
"We want to achieve our 350,000 tonnes goal first, then move
further into upstream where we expect higher profit return,"
Keiichi Goto, deputy chief executive officer of JX Nippon
Mining, told Reuters in an interview earlier this week.
JX's rival Sumitomo Metal Mining Co Ltd also plans
to boost annual volume of copper content procured from its own
mining interests to 300,000 tonnes by the 2021 business year
from 120,000 tonnes now.
Last September, JX Nippon Mining's 66 percent owned smelting
unit Pan Pacific Copper (PPC) bought a 40 percent interest in a
large South American copper exploration project in Frontera from
the Japanese government.
PPC, the world's No.3 copper smelter, is set to start
producing copper concentrate at its 75 percent-owned Caserones
mine in Chile late this year after spending nearly $3 billion in
Caserones, slated to produce 150,000 tonnes copper annually,
will boost its metal self-sufficiency rate to 50 percent of its
total output in 2015, making it less dependent on big miners
such as Freeport McMoRan Copper & Gold Inc and BHP
Investors are keen to hear about JX's post-Caserones plans.
"As post-Caserones work, our priority is to pursue our own
two development projects which we know the most," Goto said.
"But if any good acquisition deals come up, we may buy interests
in mines from other companies," he said.
PERU PROJECT REVIVAL?
A scoping study, the first step of feasibility work, is
underway at Frontera which extends over Chile and Argentina, and
an early test suggested there are about 2 billion tonnes of the
resource, potentially similar to what Caserones has, Goto said.
The firm is also considering resuming the Quechua copper
project in Peru which it had put on hold in 2011 after the
feasibility study showed less reserves than its initial
"We'll look into the results of Frontera study and renewed
study of Quechua as well as other deals and conditions including
output from competing mines, then we'll decide which path we
will take...probably before the current three-year business plan
ends (in March 2016)," Goto said.
Due to a series of portfolio realignments by major resource
firms and regulatory pressure, some copper assets are up for
sale, such as Glencore Xstrata PLC's Las Bambas project
Goto declined to say whether JX is interested in such deals,
but he said the desirable mine size would be somewhere between
50,000 tonnes and 200,000 tonnes in annual copper output.
The company also wants to diversify its resource base as its
holdings in copper mines depend heavily on Chile, he said,
pointing to Australia and Canada as attractive target areas, and
it is working on 10-20 early-stage exploration projects in
various areas including Australia.