MMG Executive Eyes Next Big Deal Within a Couple of Years

MMG Ltd., the overseas unit of China’s biggest state-owned metals trader, will likely be back out shopping for its next big acquisition within a couple of years.

MMG, based in Melbourne, led a group that bought the Las Bambas copper project in Peru from Glencore Plc last year for about $7 billion. While the company is unlikely to do any big deals for the next year or so as it completes construction at Las Bambas and seeks to reduce debt, it still wants to become one of the top “mid-tier” mining companies by 2020, said Michael Nossal, MMG’s executive general manager for business development. The company has said previously that would mean an enterprise value in the range of $20 billion.

“We won’t do that organically,” Nossal said in an interview. “Las Bambas gets us probably over halfway there. We’ll need more acquisitions over that period of time.”

There were about 28 months between MMG’s purchase of Anvil Mining Ltd. and the closing of the Las Bambas deal on July 31, according to data compiled by Bloomberg. MMG would like to be completing the next deal about 30 months after the Las Bambas close, Nossal said Monday in Hollywood, Florida, where he was attending the BMO Global Metals & Mining conference. The 30-month target is a personal one, rather than a formal company objective, he said.

MMG, controlled by China Minmetals Corp., is focused on base-metal assets, especially copper and zinc.

Copper ‘Oversold’

Nossal said copper prices, which have declined about 8 percent in London this year after dropping 14 percent in 2014, had fallen more than he would have expected given market fundamentals.

“We think the recent very downward movement is probably a little bit oversold, a little bit of investment reaction rather than driven by pure fundamentals,” he said.

For now, MMG is concentrating on completing construction at Las Bambas, where production is targeted for the first quarter of 2016.

The company is also considering the next steps at its Dugald River zinc, lead and silver project in north Queensland, and looking for growth opportunities at its copper assets in the Democratic Republic of Congo, Nossal said.

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