Top China Copper Maker Seeks Overseas Deals as Profit Drops

Updated on
  • Shares slump to the weakest level since the end of June
  • Company is seeking to increase its international profile

Jiangxi Copper Co., China’s biggest producer, said it will step up overseas mergers and acquisitions after low metal prices eroded profit by more than a third. The shares fell to the lowest in almost two months.

Net income slumped 38 percent to 643 million yuan ($96.8 million) in the first half from 1.03 billion yuan a year earlier, the company said in a statement to the Hong Kong Stock Exchange on Wednesday, amid slowing domestic demand, rising production and record imports of the refined metal.

The producer will seek to capture M&A opportunities in mining arising from low commodity prices and “facilitate the progress of internationalization of the company,” the state-owned smelter said. Sales climbed 20 percent to 90 billion yuan, under international accounting standards. 

The company is joining its Chinese peers in seeking international assets. China Molybdenum Co. agreed in May to pay $2.65 billion for Freeport-McMoRan Inc.’s Tenke copper and cobalt mine in the Democratic Republic of Congo. MMG Ltd., which is owned by China Minmetals Corp. and has the Las Bambas copper mine in Peru, could spend up to $5 billion buying mines, it said in May.

‘Bottom Out’

Copper, used power cables, is little changed in London this year after hitting a seven-year low in January, trailing other metals in the commodities rebound. Prices on the Shanghai Futures Exchange averaged about 15 percent less in the first six months from a year earlier. China imported a record amount of refined copper in the first half, even as production increased 7.6 percent. The company’s cathode output was up 3.1 percent in the first six months, it said.

Copper will probably “bottom out soon” on looser monetary policies adopted by countries to stimulate growth, the company said. The smelter contributed $100 million to a Cayman Islands-based fund with CCB International Asset Management Ltd. to invest in global resources projects, it said.

The decline in earnings followed warnings from other smelters last month. Tongling Nonferrous Metals Group said net profit will probably slump as much as 92 percent to 20 million yuan in the first six months, while Yunnan Copper Co.’s net may have dropped as much as 36 percent to 10 million yuan.

The company’s shares lost 1.3 percent to close at HK$8.87 in Hong Kong. The stock has dropped 3.5 percent this year, compared with a 4.1 percent gain in the benchmark Hang Seng Index.

— With assistance by Winnie Zhu

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