Chinalco Studies Copper, Rare Earths Acquisitions; Builds Toromocho Mine

Aluminum Corp. of China, owner of the nation’s largest maker of the metal, is studying copper acquisitions and plans to start building its Toromocho mine as early as next month, President Xiong Weiping said.

Copper ore from the $2.2 billion mine in central Andes will be shipped back to China, Xiong said in a Bloomberg Television interview in Hong Kong today. Yunnan Copper Industry Group, a copper unit, will consume some of the ore, he said.

Chinalco, as the Beijing-based company is known, is investing in copper, iron ore and rare earths as overcapacity and rising power costs shrink profit margins from aluminum smelting. Copper is “the most important metal” that the company is seeking as China imports more than 70 percent of the ore it needs, Xiong said.

“We are seeking to invest in large and quality copper deposits elsewhere and hope to make some breakthrough in the next few years,” Xiong said. Chinalco is looking at copper projects with at least 3 million to 5 million metric tons of resources, he said.

The Toromocho mine is scheduled to produce 210,000 tons of copper a year by the end of 2012, Gerald Wolfe, Chinalco’s manager in Peru, said last September. The company is engaged in sales talks for the rest of the ore it won’t use, Xiong said, declining to identify possible buyers.

Rare Earths

A Chinalco unit has held talks with the provincial governments in Jiangxi and Guangxi provinces to win the right to consolidate rare earth resources, Xiong said. The company is also studying possible investments in smelting facilities, he said.

The Chinese government wants companies including Jiangxi Copper Co. and China Minmetals Corp. to consolidate rare earth resources domestically by buying mines or smelting facilities. In April, Chinalco and Jiangxi Rare Earth & Rare Metals Tungsten Group formed a joint venture to develop rare metal products.

China controls 97 percent of the production of materials known as rare earth oxides, which is found in General Dynamics Corp.’s M1A2 Abrams tank and Aegis SPY-1 radar made by Lockheed Martin Corp. The country this year slashed export quotas for rare earths by 40 percent, leading to a rise in global prices.

--Xiao Yu. Editors: Tan Hwee Ann, Indranil Ghosh.

To contact the reporter on this story: Xiao Yu in Hong Kong at yxiao@bloomberg.net;

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