PeruGloria enhiesta en milenios de historia…

While all the news lately has focused on addressing the financing of the last of Chinalco in Rio Tinto, Chinese enterprises are still raw materials looking far and wide for new opportunities, as explained in our December article: the populations of China for raw materials. Another state-owned or controlled by companies are looking for in South Africa and South America, and assets in Australia. Since there is great activity and reporting on the bid from Rio Tinto, a look at some of the other activities that can be justified.

China has a long history of investing in operations in South America in 1992, saw the first business outside of mainland China, where capital Steel (Shougang now) bought the Peruvian state-owned iron ore mine HierroPeru concern. This company now works as Shougang Iron and is currently ramping up its expansion efforts in the region. When the company was the son of Den and his company Xiopeng abroad was seen as an experiment to see how a smooth transition could be made of a closed economy, provided one with extensive connections to markets international.

Needless to say the rest is history, as we have supported state institutions in China making deals on a global oil and minerals and other strategic resources. Shouganh Iron recently announced it will invest $ 1 billion in 2009 to expand production at its plant in southern Peru.

"The investment of $ 1 billion will help expand the production capacity of the plant 10 million tonnes per year," said Chief Executive Wu Bin, after meeting with Peru's president Alan García.

Meanwhile, Shougang Concord (the international arm of Shougang group), also announced the acquisition of 12.5% of coking coal producer Fushan International Energy Group, which enables secure bookings coke prices down. This reflects Mittal's strategy has been following over the past five years, becoming a work of pure steel in a fully integrated producer (ore, coke, pig iron and lamination).

Implementation of this mandate, the interests of China have invested heavily in the central-western Australia in the past year. Midwest Sinosteel Mining acquired through a hostile bid 1.47 billion U.S. dollars, defeating an attempt by local producers Murchison merge the two companies, while Anshan Iron & Steel is to increase its stake in Gindalbie Metals from 12 percent to 36 percent. Shougang has also achieved 40 per cent of Mt Gibson Iron Ore, one company milestone ore mining Australia.

This activity Australia has a knock on effect too, minus the history of Rio Tinto. Sinosteel Anshan are shareholders and equity in Yilgarn local operator, that is driving the development of ports and rail facilities in mid-Western Australia Oakerjee project. This has turned into a political impasse at the state level, as local interests compete with those of China supported the project of $ 2 billion, As reported in The Australian.

Back to Peru and Chinalco is not resting on its laurels, rumors abound that it will invest more than $ 1.5 billion in construction its Toromocho copper mine. In conclusion, the annual copper production of Chinalco will increase to 200,000 tonnes and copper exports from Peru will increase by 25%. Toromocho has claimed a reserve of 12 million tonnes of copper and annual production could reach up to 19% total annual requirements of China. Chinalco acquired all outstanding shares of Peru Copper Corporation of Canada in August 2008, for a reputed $ 860 million.

Now, after a recent study on the viability of the Galeno copper project showed that more than 20 years of mine life, which will produce 144,000 tonnes of copper concentrate per year, an average more than 200,000 tons per year within 5 years, the Chinese company Minmetals Corporation, which owns 60% of the Galeno project is seeking funding to the mine. It is estimated that Chinese companies have committed to invest over $ 6 billion in Peru's mining sector over the next five years.

Minmetals enjoyed a cap 2008, which has recently reported that for the ninth consecutive year, the country's largest metals and minerals producers reported business growth and profits. This has led to Minmetals to announce that it will pursue potential opportunities for mergers and acquisitions abroad in ferrous metals and not the non-ferrous metal sectors.

"New opportunities for foreign investment and acquisitions are becoming in many international mining companies affected by the financial crisis to see their market values decline, "said Zhou Zhongshu, president of the company last week in Beijing.

The company's sales, revenue rose 28 percent year over year to 27.7 billion U.S. dollars in 2008, while profit stagnated at U.S. $ $ 1.1 million. Revenue growth this year could reach some of the bad weather as metal prices have fallen because of the slowdown economy, said Zhou, who seems to be the stimulus for the use of acquisitions as a cushion for growth performance. This can already be seen as Minmetals is courting Chile and the state mining company Codelco, the world's largest copper producer, is working with Minmetals to develop new business and exploration opportunities in Latin America and Africa.

I see this trend continuing, as noted above, Chinese companies have been looking for oil and gas reserves in Central Asia, Africa and South America. Deep Pockets funded by a U.S. dollar currently strong and ample foreign exchange reserves can only lead to a increased acquisition activity, possibly at higher levels.

Paul Harper is a telecoms consultant currently based in Switzerland. Following a numnber of years working across Eastern Europe, Middle East & Africa, he has developed an interest in emerging markets & maintains a blog to that effect. MyStockVoice provides an insight into emerging markets & more specifically opportunities in telecoms, commodities & energy plays.

Paul writes with a view to providing information for a Western audience, showcasing opportunities for investment using ADR & ETF strategies.

More can be found at http://mystockvoice.wordpress.com

Acciones En Alza -PERU COPPER- June 2007