China’s Tongling Nonferrous Seeks Minerals in Australia, Canada

By Xiao Yu

March 5 (Bloomberg) -- Tongling Nonferrous Metals Group Co., China’s second-biggest copper smelter by output, is exploring for minerals in Australia, Canada and South America as it waits for opportunities to acquire assets, Chairman Wei Jianghong said.

“Commodity prices have been at very high levels these past few years, and we think we can wait for prices to come down further in the next year or two,” Wei said in an interview in Beijing while attending the National People’s Congress. “Then we think there will be good opportunities for acquisitions.”

Chinese companies have agreed to acquire $22 billion of commodity assets in the past month, seeking to benefit from seven-year low prices to secure copper, iron ore and zinc mines. The slump has forced indebted Rio Tinto Group and OZ Minerals Ltd. to seek Chinese investment as funds from banks dry up.

Tongling, which posted a 38 percent profit drop last year, plans to maintain 2009 copper production at last year’s level, Wei said. Still, the company will slash output should prices fall below output costs, he said. Production will also depend on the availability of raw materials and the profitability of selling the byproduct sulfuric acid, he said.

Lower smelting fees and copper prices because of overcapacity and the global recession have crimped smelting profits. Tongling Nonferrous and rival Yunnan Copper Industry Co. cut output in the fourth quarter after prices slumped 55 percent in China.

Copper futures in Shanghai rose 2.3 percent to 29,900 yuan a ton today at 11:30 a.m. local time break. Prices may average below 30,000 yuan for the year, Wei said.

The Chinese government is spending 4 trillion yuan ($585 billion) on a stimulus package to bolster sagging economic growth, raising expectations that metals demand will rise as it builds more infrastructure projects including railways and airports.

The stimulus package hasn’t had an impact on copper prices and demand yet, Tongling’s Wei said.

To contact the reporter on this story: Xiao Yu in Beijing at yxiao@bloomberg.net;