Companies

Minmetals sees improved 2010 results

By Zhang Qi (China Daily)
Updated: 2010-11-24 11:19

BEIJING?- China Minmetals Corp, China's largest steel and metals trader, expects an 80 percent increase in its fortunes this year, with increased profit, propelled by a rally in metal prices despite recent pullbacks and good returns from its overseas mining resources.

"Revenue may rise by 70 to 80 percent this year, while profits will perform better (than the revenue), on the back of the recovering commodity prices and returns from overseas acquisitions," Zhou Zhongshu, president of Minmetals, told China Daily.

The Beijing-based company is engaged in producing and trading metals and minerals, including steel products, copper, aluminum, zinc and nickel.

Metals prices, including copper, settled lower on Tuesday on concerns prompted by the European Union's bailout of Ireland and ongoing worries about China's future steps to curb loans and cool inflation.

Copper jumped 42.9 percent to trade at 70,200 yuan ($10,570) a ton on Nov 11 from June, while zinc rose from 13,855 yuan a ton in June to 21,930 yuan in October. Copper dropped to 61,490 yuan a ton and zinc slipped to 17,200 yuan a ton on Shanghai Futures Exchange on Tuesday, according to the consultancy firm, Umetals.com.

Metal prices have been ramped up this year on the back of growing industry demand, driven by China's strong economic growth, said Wang Lixin, an analyst at Umetal.com.

"Commodities are so financially related that prices slipped on concerns over eurozone debt, despite the market demands that still exist there, " she said.

Minmetals' revenue dipped 4 percent last year to 173 billion yuan from 181 billion yuan in 2008, as the global economic crisis dampened commodity prices. Profit slumped nearly 50 percent year-on-year in 2009 to 3.15 billion yuan.

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In spite of the revenue decline due to lower commodity prices, the company's assets grew 136 percent as it successfully acquired several domestic and overseas mining operations.

The company paid $1.39 billion for zinc producer OZ Minerals in June 2009 to expand its presence in Australia.

Zhou said the company's overseas subsidiary Minerals and Metals Group (MMG) will serve as an international investment platform and is planning more overseas mergers and acquisitions to bolster the company's raw material supplies.

China, which dominated the global resources transactions market last year, will maintain significant growth in the next 10 years, driven by the country's need to secure raw materials to support its rapid economic transformation, said David Xu, partner of transactions and restructuring sector at KPMG China.

China Business News earlier reported that Minmetals plans to list its rare earth unit after prices rose to a record high amid supply concerns, citing an unidentified source.

Zhou said Minmetals is paying close attention to the rare earth sector. "We will release any information (about the listing) when necessary, " he said.

China Minmetals Rare Earth Co Ltd, which produces the more expensive heavy rare earth elements from its operations in the Ganzhou area of Jiangxi province, reported revenue of 1.98 billion yuan in 2009.