JIEFU antimony NEWS:Metals giant to buy mine

Hunan NonFerrous Metals (2626) hopes to acquire a tungsten mine from its parent next year in an attempt to boost its upstream resources.

Through the purchase, the company intends to cash in on soaring metal prices.

Bolstering metal reserves is an important business strategy, president He Renchun told The Standard at the firm's headquarters in Hunan province.

"Through acquisitions, we can enhance our market share in the domestic market, and we can strengthen our bargaining power in pricing and also become self-sufficient in metal resources."

Hunan NonFerrous possesses the world's largest tungsten reserves. Tungsten is a raw material used in light bulbs and by the aviation industry.

The company said annual output of tungsten concentrates will be raised to 9,000 tonnes from the current 3,000 tonnes, once the acquisition is completed.

The Yaogangxian tungsten mine, owned by the parent company, has about 300,000 tonnes of proven reserves, the world's third largest, He said.

Tungsten reserves owned by the company will account for 20 percent of China's total after the acquisition, up from the current 15 percent, He said, declining to disclose the valuation of the metal mine.

In the first half of the year, Hunan NonFerrous made six acquisitions in the mainland and Australia. The company is seeking acquisition opportunities in China and overseas.

In May, it paid US$23 million (HK$179.4 million) for a 10 percent stake in Australia's Compass Resources. Hunan NonFerrous Metals plans to explore metal resources in Australia. The company will focus on lead concentrates and cobalt through a joint venture to be formed in the fourth quarter. Initially, Hunan NonFerrous Metals will invest about A$70 million (HK$412.04 million).

The company is also looking for acquisitions related to the core downstream business. Its smelting business accounted for 71 percent of total sales in the first half, while the upstream metal mine operations contributed 13 percent.

Net profit was up 18 percent to 300 million yuan (HK$293.82 million) in the first half, thanks to high metal prices. Tungsten, zinc, lead and antimony, accounted for 70 percent of earnings. Data from the United States show that antimony prices increased from US$1.82 to US$2.35 per pound in the first quarter.

He predicted metal prices will remain high for the rest of the year.

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