MY: China has copper, aluminium buying plan -Minmetals
China plans to buy copper, adding to purchases of aluminium and other metals, the chairman of state-owned trading firm China Minmetals Group told reporters on Friday.
Asked if China had started buying copper, Minmetals chairman Zhou Zhongshu said: "We are ready for it." He was speaking on the sidelines of China's annual National People's Congress.
"We have not settled the volume of the copper purchase yet," he said.
Zhou did not say whether the purchase plan was designed to build up strategic copper stocks or was an ad hoc plan to buy base metals to support smelters facing weak demand.
Trading sources had told Reuters that China's State Reserves Bureau (SRB), the agency which manages the state's commodity stockpiles, had bought aluminium and zinc as a way of helping smelters, while its appetite for copper is driven by the desire to build up a strategic reserve.
The SRB has bought a total of 590,000 tonnes of aluminium at a total cost of about $1.05 billion and 159,000 tonnes of zinc for $270 million from local smelters in December-February, according to sources with knowledge of the bidding rounds for those metals.
Two trading sources said last month the SRB had contracted 220,000-240,000 tonnes of copper from suppliers including Minmetals, as well as a Chilean producer and an international trading firm for the plan to boost strategic stockpiles.
For a graphic of global stocks of aluminium, please click on:
For a factbox about China's purchases for reserves, please click on
Zhou was speaking on the second day of China's annual parliamentary meeting, the National People's Congress, where he had earlier submitted a proposal suggesting China should set up a fund to buy resources overseas.
His submission said demand and prices for minerals were expected to remain depressed for the next year or two, giving China the opportunity to make low-cost acquisitions overseas.
Zhou said the national fund should be as big as possible.
"Bringing in 1 percent of the foreign exchange reserves would be good", he said, referring to China's savings of $2 trillion.
Many state-owned firms, including Minmetals, have already gone abroad to invest in resources companies. The firm's latest foray was a $1.7 billion rescue of Australia's OZ Minerals, the world's No.2 zinc miner.
"We Chinese lack the experience to manage such a project as we do not have such a big mining company in China. They have two advantages: that of resources and that of management," Zhou said. "We didn't buy them on an impulse. We have been following them for 3-5 years."
Minmetals is waiting to hear whether Australia's Treasurer Wayne Swan will approve its bid. Zhou said he was hopeful of the deal going through. If it does, he plans to use OZ Minerals as a base to consolidate other overseas assets and to keep the current management running the company.
"We always take a low-key approach to such things and want to do it well. We focus on benefits for both sides, because only a win-win deal can make it a long-term and good deal."
