Zijin Mining Says Copper Prices to Gain on Recovery, Liquidity

By Bloomberg News

Aug. 10 (Bloomberg) -- Zijin Mining Group Co., China’s largest gold producer, said a recovering world economy and loosening bank credit will bolster copper prices in the second half of the year.

Prices will gain because positive factors will outweigh negative ones, such as an oversupply of copper, the Fujian province-based company said late yesterday in its earnings statement. Copper is used in pipes, buildings and power equipments.

Copper prices have doubled this year as China, the biggest user, imported record amounts for stockpiling and as the government pushed a 4 trillion yuan ($585 billion) stimulus. Zijin’s call differed from Bank of America Merrill Lynch, which last week said copper prices are poised to fall.

“Though there is an oversupply of copper, as the signs for a recovering world economy become more clear and with an appropriately loosening credit control and liquidity, copper has rebounded strongly,” Zijin, which gets 14 percent of earnings from copper, said. “We expect positive factors to outweigh negative ones in the second half.”

Zijin gained as much as 1.7 percent to 10.61 yuan in Shanghai trading and was at 10.47 yuan at 10:44 a.m. local time.

Profit Rose

The company yesterday said first-half profit gained 11 percent on higher gold prices and production. Gold, which has risen by 8.2 percent in prices this year, accounts for 83 percent of net income, it said. It also produces zinc and iron ore.

“There will be positive changes in world economic growth in the second half,” Zijin said. “Gold prices will remain at a high level.”

Demand for zinc, used in automobiles, will rise strongly in China in the second half, Zijin said. That will support prices though there is a “big” oversupply, it said.

The company, which has been looking at gold and base metals acquisitions in China, hasn’t bought assets because of high gold prices and a “rapid” recovery in base metal prices, Zijin said. It will continue to seek acquisitions in China and overseas in the second half, the company reiterated.

To contact the Bloomberg News staff on this story: Xiao Yu in Beijing on yxiao@bloomberg.net;