Hong Kong, August 14 – Huludao Zinc Industry Co. Ltd., China’s largest zinc producer by capacity, wants to acquire mines to reduce its material purchases from local and overseas markets, a company official said on Monday.
Huludao does not own a mine currently but has capacity to produce 390,000 tonnes of zinc a year, making it the country’s largest buyer for locally produced and imported zinc concentrate, the raw material.
The firm also has capacity to produce 30,000 tonnes of lead and 100,000 tonnes of refined copper.
To ease the pressure of buying the materials, Huludao plans to buy a stake in Huaxia Mining, which is developing a mine to produce zinc, lead, copper and silver on the remote Tibetan plateau in the far west of China from October this year.
The Tibetan site has proven reserves of only 200,800 tonnes of zinc, 200,400 tonnes of lead, 10,600 tonnes of copper and 1,180 tonnes of silver, but it marks Huludao’s first investment for resources.
“We will buy more mines in the future,” the official with the firm’s board said.
To finance the acquisition, Huludao wants to place not more than 300 million new A-shares with local and foreign investors, according to the firm’s report filed to the Shenzhen Stock Exchange. It did not say how much it would pay for the stake.
It also plans to invest 280 million yuan ($35.1 million) in a 80,000-tonne-a-year zinc alloy plant, which is scheduled to start production in 2007.
Huludao would produce as much as 330,000 tonnes of zinc this year as prices were high, against about 250,000 tonnes last year, another Huludao official said last month.
The extra zinc output would come from the firm’s new 90,000-tonne-a-year lead and zinc facility, which started production last month.
It also restarted 50,000 tonnes of capacity at a 130,000-tonne-a-year zinc plant last month. Some 30,000 tonne of capacity at the same zinc plant has still been closed since 2001.
World zinc prices hit an all-time high of $3,970 a tonne
($1=7.9880 yuan)
