Sandfire Sees Samsung, Chinalco as Potential Copper Partners

Copper Mining
By the end of the first quarter, demand for copper exceeded output by 84,000 metric tons, according to the International Copper Study Group. Photographer: Brent Lewin/Bloomberg

Sandfire Resources NL, an Australian copper producer, has held talks with potential partners including Samsung Group and Chinalco Mining Corp. International to invest in projects or make acquisitions.

Manufacturers and trading houses are among those seeking to assist the development of new copper assets to secure long-term supply, Sandfire Chief Executive Officer Karl Simich said in an interview. A South Korean entity involved in the talks told the Perth-based producer it planned to spend at least $2.5 billion in investments in copper projects, he said.

“They are looking for long-term sustainability of their respective businesses, whether that’s electronics, construction, car manufacturing, copper-rod manufacturing,” Simich said yesterday at Sandfire’s DeGrussa copper and gold mine, 560 miles (900 kilometers) northeast of Perth.

Sandfire rose 0.2 percent to A$6.33 in Sydney. It’s risen about 12 percent in the past 12 months.

Discussions have also included LG Corp., Yunnan Copper Industry Co. and “other people with big balance sheets who, given the right opportunity, would be very happy to work together on things,” Simich said.

Jiang Zhinan, a media official with Aluminum Corp. of China, which controls Chinalco Mining and Yunnan Copper, said the company could not immediately comment on the discussions. LG Corp. and Samsung Group didn’t immediately respond to e-mails requesting comment.

Copper Slide

A lack of major new projects means copper may slide into deficit from about 2017, with 4.5 million metric tons of new production capability needed to meet demand by 2022, according to Wood Mackenzie Ltd. Chinese tube producers are at full capacity, while state-grid investment is powering growth for cable and wire demand, Morgan Stanley said in a June report.

Copper for delivery in three months rose 0.05 percent to $7,077.75 a ton on the London Metal Exchange at 9:01 p.m. Sydney time.

Continued demand from China and Japan will be supported by an increase in construction activity as economies in the U.S. and Europe improve, Simich said.

“I just can’t see what’s going to cause the copper price to manifestly or dramatically reduce from where it is,” he said.

Sandfire will consider introducing a dividend policy as it reviews results for the year ended June 30, according to Simich.

“The board is favorably disposed, and I believe we have the capacity and horsepower to commence looking at dividends,” Simich said. “It would assist us in becoming more attractive to a greater audience.”

(An earlier version of this story was corrected to reflect reference is to Samsung Group.)

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