Metals group casting eyes at stellar future

Chinese company follows path of acquisitions and integration to secure resources in Africa, report Xing Zhigang and Li Jiabao from Johannesburg

Boosted by expanding demand at home, a leading metals mining and production company from China has been looking to Africa to secure supplies through acquisitions as well as integration with local partners.

"Our parent company's output of metals such as copper and cobalt has grown very fast in recent years. Our own resources are far below what is needed for the smelting. And thus a stable and sustainable supply of such resources is a very urgent need," said Gao Jianke, chief executive officer of Wesizwe Platinum Ltd, speaking in his office in Devcon Park in Johannesburg.

Wesizwe Platinum was a mining company listed in South Africa's Johannesburg Stock Exchange before Jinchuan Group Co Ltd and the China-Africa Development Fund jointly acquired a 51 percent stake in May 2011 for $227 million.

While progress at times has been challenging, the rewards for the company and local residents have been great.

Jinchuan Group, located in Gansu province, is China's largest producer of platinum, nickel and cobalt, as well as China's third-largest copper producer. But more than 50 percent of the group's nickel ore is imported and the group's own copper ore accounts for less than 20 percent of the demand, Gao said.

"The supply shortage is also true for other miners and producers that has experienced fast development in recent years. For Chinese resources companies, 'going out' is inevitable, even though our overseas footprint was small before 2008," Gao said.

Some 60 or 70 percent of Jinchuan Group's overseas assets are in Africa, which has rich reserves of copper and cobalt ores and platinum-containing soil. The group has delineated four regions for resource supplies: the Europe and Africa region, with headquarters in Johannesburg; the America region based in Canada; the Oceania region covering Australia and Southeast Asia and the region of Central Asia and China.

Other metal producers from China have also extended their reach into Africa with Sinosteel Corp engaged in chrome ore mining in South Africa and Baiyin Nonferrous Metals Group Co Ltd involved in gold mining in the same country.

In the 1990s, Jinchuan Group started to look abroad to acquire resources, mainly through trade. In 2004, a subsidiary, South Africa Jinchuan Resources (Pty) Ltd, was made responsible for the international trading of nickel, copper, cobalt and chrome ores.

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