Minmetals' annual profits drop 37 percent

China Minmetals Corp, the nation's largest metals trader, has recorded a 37 percent drop in annual profits to 8 billion yuan ($1.3 billion), which it blamed on falling global commodity prices and a domestic economic slowdown.

Revenue last year was 325 billion yuan, said President Zhou Zhongshu, during the company's annual work conference in Beijing.

"China's economic slowdown has resulted in a decline in global commodity prices and a gloomy capital market, which has put unprecedented pressure on Minmetals' major businesses, including nonferrous metals, ferrous metal trading, and mining," said Zhou.

He predicted that the era of soaring demand for metals in China had gone, and that companies in the industry will continue to face difficulties in making profits.

"Metals supply and demand have changed, which will force the industry to reduce production capacities," he said.

"The capital-driven growth of the metals industry cannot be sustained in the future."

In 2011, Minmetals made a profit of 12.8 billion yuan, a 98.5 percent growth compared with the previous year.

Zhou said the company's 2013 target is to keep profits stable at 8 billion yuan, with total revenue of 320 billion yuan.

"We will increase upstream resources reserves, while raising the company's processing abilities in the downstream businesses," he added.

Minmetals considers the central and western parts of China, along with the emerging economies, as its most promising markets.

China's metal mining industry has benefited enormously from the country's industrialization and urbanization.

The government has already announced plans to increase infrastructure construction investment in those key central and western areas.

Zhou added: "The company will seize opportunities during the urbanization of western China, which will bring demand for metals."

Minmetals will also keep a close eye on overseas markets to expand its businesses abroad, especially infrastructure construction investment in emerging economies, Zhou said.

Sales volumes of products including iron ore, steel, copper and aluminum all reached record highs last year, with reserves also strengthened.

Iron ore reserves reached 2.2 billion metric tons, copper reserves were 13.5 million tons and rare earth reserves reached 161,900 tons.

Xu Xiangchun, an information director at industrial consultancy Mysteel, said that 2China's economy is at a transformational stage, and that its demand for iron ore and other metals is declining.

"China's production capacities for steel and nonferrous metals is still excessive. It will take years to restructure the industries."