Smelter targets overseas M&A
Jiangxi Copper Co, China’s biggest copper producer, said it will step up overseas mergers and acquisitions after low metal prices eroded profit by more than a third.
Net profit slumped 38 percent to 643 million yuan ($96.8 million) in the first half, from 1.03 billion yuan a year earlier, the company said in a statement to the Hong Kong Stock Exchange on Wednesday, amid slowing domestic demand, rising production and record imports of the refined metal.
Sales climbed 20 percent to 90 billion yuan, under international accounting standards. The company will seek to capture M&A opportunities in mining that are arising from low commodity prices and “facilitate the progress of internationalization of the company,” the State-owned smelter said.
Copper, used in pipes and wiring, is little changed in London this year after hitting a seven-year low in January, trailing other metals in this year’s commodities rebound.
Prices on the Shanghai Futures Exchange averaged about 15 percent less in the first six months from a year earlier. China imported a record amount of refined copper in the first half, even as output rose 7.6 percent from the same period in 2015.
The copper price is expected to “bottom out soon”, given looser monetary policies adopted by countries to stimulate economic growth, the company said.
In the first half, the smelter contributed $100 million to a Cayman Islands-based fund with CCB International Asset Management Ltd, to invest in various resources projects globally, it said.
The decline in earnings followed warnings from other smelters last month. Tongling Nonferrous Metals Group said net profit would probably slump as much as 92 percent to 20 million yuan in the first six months, while Yunnan Copper Co’s net profit may have dropped as much as 36 percent to 10 million yuan.
The company’s shares closed unchanged at HK$8.99 ($.1.16) on Tuesday in Hong Kong, before its earnings announcement.