MMG Ltd., the Chinese miner that’s set aside $4 billion for acquisitions, is seeking stakes in South American copper producers as it forecasts the commodity’s price to climb this year.
The listed unit of China’s biggest metals trader is also looking to provide technical support or offer financing to producers, Chief Executive Officer Andrew Michelmore said yesterday, without disclosing any target. The Hong Kong-based company completed the acquisition of African copper producer Anvil Mining Ltd. for $1.3 billion in March last year.
“You’ve got to go where the minerals are and the minerals are there in Africa and South America,” he said in a phone interview from Melbourne. “One of the things we have to look at is what we can afford to do with our cash flow and how big a bite we can take.”
Copper is an attractive investment amid strong demand and supply constraints, which will ensure prices stay in a range of $7,500 to $8,500 a metric ton this year, Michelmore said. Inmet Mining Corp. said Jan. 23 the sale of a stake in the Cobre Panama copper mine is among “many” options being considered by the Toronto-based company as it fends off a C$5.1 billion ($5.1 billion) hostile bid from First Quantum Minerals Ltd.
Michelmore declined to say if Cobre Panama is on his list. Finding a project with the right value is a challenge in South America because most mines have lower grades of ore, making it more costly to produce the metal, he said.
The company isn’t interested in projects with less than 50,000 tons of annual output, he said.
MMG shares rose 2.9 percent in Hong Kong to HK$3.23 as of 10:47 a.m. local time. That compares with the 0.4 percent decline in the benchmark Hang Seng index.
Copper, which rose 4.4 percent in 2012, has climbed 3.3 percent this year. It traded at $8,192.25 a metric ton on the London Metal Exchange as of 10:59 a.m. in Hong Kong. Traders are the most bullish on the metal in 15 months, according to 30 analysts surveyed by Bloomberg.
“I’m still quite positive about copper,” Michelmore said. “Demand for copper is still quite solid and supply has been the issue.”
MMG, a unit of China Minmetals Corp., is also looking to invest more in nickel sulphide and has exploration plans in Africa, Canada and the U.S., Michelmore said.