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Xiangguang Copper may buy 15% stake in CuDeco

By Zhang Qi (China Daily)
Updated: 2010-03-10 09:34

Xiangguang Copper may buy 15% stake in CuDeco

A worker displays a core sample of chalcopyrite, which shows traces of copper. Copper is in high demand for use in the power stations being built to alleviate China's energy shortage. [Bloomberg News]

Deal to help Chinese company get raw material from Rocklands mine

Xiangguang Copper, a copper smelting unit of chicken supplier Shandong Fengxiang Group is planning to acquire a stake in Australian gold and copper miner CuDeco, to bolster its raw material supplies.

Fengxiang, which is better known as a supplier to global fast food chains such as KFC and McDonald's, confirmed its unit was in talks with CuDeco for a 15 percent stake in the latter's Rocklands copper mine.

"We are interested in purchasing overseas resources to secure our material supplies and CuDeco could be a good option," said Liu Zhiguang, president of Fengxiang's subsidiary Xiangguang Copper, which has an annual copper production capacity of 400,000 tons.

"The Xiangguang deal will help improve our finances, while the Chinese firm will get access to copper supplies," said the Australia-listed firm's chairman Wayne McCrae.

Copper, used in telephone wires and computer chips, more than doubled in value last year and is in high demand for use in the power stations being built to alleviate China's energy shortage.

The Rocklands mine, near Cloncurry, Queensland, will have a 10 year exploration time frame and an annual production capacity of 3 million tons. It is expected to generate about $960 million in revenue annually, said McCrae.

CuDeco also said the company was also in talks with Chinese iron ore trader Sinosteel for the project financing estimated at around $100 million.

"If we bag the project, it would be the first mining construction project undertaken by a Chinese firm in Australia," said Lu Pengcheng, general manager of Sinosteel Equipment & Engineering Co.

CuDeco said drilling of the 24 square kilometer Rocklands project could go on for up to a decade, but it was committed to begin mining operations by mid-2011.

McCrae, who has more than 30 years of experience in mining exploration, discovered Century, the world's second biggest zinc mine, in the early 1990s. Nineteen years ago, he sold it to Rio Tinto for $3 million. Later Rio Tinto sold the mine to OZ Minerals Ltd.

"I'm not going to do that (mine selling) again. I want to develop the mine, and this will be the last project for me," said McCrae, who is anxious to find a partner to ward off any takeover threat.