Usmanov’s Metalloinvest Said to Hold China Talks on Copper Stake

Metalloinvest Holding Co., Russian billionaire Alisher Usmanov’s mining company, is in talks with Chinese companies about selling a stake in a Siberian copper deposit, according to people familiar with the matter.

Hopu Investment Management Co. is among potential investors, two people said, asking not to be identified as the information is private. Metalloinvest has been in contact with the Chinese fund regarding a share in the Udokan project, the people said.

Metalloinvest Chief Executive Officer Andrey Varichev is accompanying Russian President Vladimir Putin on a visit to China that starts tomorrow, and may hold further talks about selling a stake in the project, one of the people said.

Udokan, near Lake Baikal in Siberia, contains about 26.7 million metric tons of copper resources, making it among the world’s five-largest undeveloped deposits. Metalloinvest has estimated total development costs for the project at $8 billion in 2012. It won the deposit in a 2008 tender with a bid of 15 billion rubles ($432 million).

Metalloinvest’s press service declined to comment. A call to Hopu’s offices in Beijing wasn’t answered outside of regular business hours.

Hopu may seek a Chinese mining company as a partner, should a deal be agreed, two people said. The talks aren’t exclusive and other bids are possible, they said.

Ukraine Crisis

Putin plans to encourage investment from the Asian neighbor as U.S. and European sanctions over the Ukraine crisis threaten to tip Russia’s economy into recession, two senior government officials said May 7. Russia wants to attract cash from the world’s second-biggest economy into industries from housing and infrastructure construction to natural resources, they said.

Russian copper projects could be among the highest priorities for Chinese investors, George Buzhenitsa, a Moscow-based Deutsche Bank AG analyst, said at the time.

Hopu is a private-equity firm set up by Fang Fenglei, the former head of Goldman Sachs Group Inc.’s Chinese securities venture. The firm raised about $1.2 billion in the first round of funding that ended in November and wants to amass $400 million more before the end of the second quarter, a person with knowledge of the matter said in March.

Hopu already has investments in a Chinese infant-formula maker, modern warehouse operator and in April became a co-investor in Noble Group Ltd.’s agricultural trading unit.

Usmanov is the richest Russian, with a fortune estimated at at $16.7 billion, according to the Bloomberg Billionaires Index.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE