China’s Appetite for Metals Expanding Beyond It’s Borders

Added March 6th, 2010 by Anthony David

Despite the continuing effects of the global financial meltdown, China is aiming for an increase of 11% in industrial output this year. Industrial production is expected to outpace economic growth, forecast at 8% for China in 2010. As most of this growth is expected to come from fewer players than in 2009, the government is aggressively promoting mergers and acquisitions in an attempt to increase industrial concentration.

Hanlong Mining Investment Pty Ltd, the wholly owned Australian subsidiary of Sichuan Hanlong Group Company Limited (Chengdu, China), is in the process of acquiring a controlling stake of 55.3% in Moly Mines Limited (ASX:MOL) (West Perth, Australia). Apart from its equity investment of $140 million, Hanlong will arrange for up to $500 million of debt financing for Spinifex Ridge molybdenum/copper mining project in Western Australia. Estimated to hold at least 500,000 tonnes of reserves, the deposit will enable production of 20 million tonnes per year of molybdenum for a period of 23 years.

Sinosteel Corporation (Beijing, China) is reported to be in talks with Australian nickel and manganese miners following its $1.36 billion acquisition of Midwest Corporation Limited (Perth, Australia).

In the magnesium sector, Timminco Limited (TSE:TIM) (Toronto, Canada), manufacturer of solar grade silicon, completed the merger of its magnesium and specialty metals business with the China-based magnesium operations of Winca Group Incorporated (Stafford, Texas) in July 2009. Winca owns a stake of 80.5% in the combined venture known as Applied Magnesium International Limited (Denver, Colorado). These acquisitions by Chinese companies show a trend that is likely to continue well into the future, as China seeks to secure long term resources to keep its industries growing. The country is emerging as a key player to watch out for vis a vis these metals as far as supply, demand and prices are concerned.

Back to Stories