Business holds up for Minmetals arm

Chinese demand for copper concentrates, such as from this mine in Western Australia, has been firm this year, with imports for the first five months up 30 percent year-on-year. Provided to China Daily

China's first-half slowdown didn't really dent base metal demand, MMG Ltd, the offshore arm of China Minmetals Corp, said on Monday.

MMG, which owns mines in countries including Laos, Republic of the Congo and Australia, said copper output rose 33 percent year-on-year in the first half to 89,235 tons. Output in the second quarter was 10 percent higher than in the first.

Zinc production, however, dropped 16 percent in the first half to 280,968 tons due to lower grades at its Century mine in Australia. Output in the second quarter was 153,572 tons, or 21 percent higher than in the first.

Melbourne, Australia-based MMG said it remains on track to meet its annual production target of 170,000 to 185,000 tons of copper and 572,000 to 590,000 tons of zinc.

"We didn't see much of an impact from China's slowdown. Stocks of copper and zinc are declining and demand is firm," chief executive officer Andrew Michelmore said in a conference call on Monday.

The economy grew 7.5 percent year-on-year in the second quarter. While the figure was in line with economists' expectations, it was a slowdown from 7.7 percent in the first quarter and 7.9 percent in the fourth quarter last year.

While many expect the Chinese economy to hard-land, Michelmore said growth won't "shut down".

He said China's new leadership has refrained from stimulating the economy to deflate asset bubbles and raise productivity, which will benefit the economy in the longer term.

Chinese bonded warehouse stocks of copper cathode fell by half between Jan 1 and June 30, to about 400,000 tons at the end of June.

Chinese demand for copper concentrates has been firm this year, with imports for the first five months up 30 percent year-on-year.

China's zinc concentrate imports have been flat so far this year. Demand for imported lead concentrates, however, was affected by an adverse price arbitrage, while the global market has been firm.

Lead output jumped by a quarter in the first half to 31,478 tons, with second-quarter production double that of the first half.

Gold output dived 58 percent to 22,699 tons. Michelmore said recent volatility in gold prices won't affect profit much, as it is only a small part of MMG's business.

In the second quarter, MMG secured a $1 billion, 13-year loan from China Development Bank and Bank of China (Sydney) for the development and construction of the Dugald River mine in Queensland, Australia. The mine is one of the world's largest and highest-grade undeveloped lead-zinc-silver deposits.

MMG said it may revise the cost and schedule for the planned $1.4 billion mine after it identified complexities in the ore body. A review of the mine, which was originally scheduled to start shipment in 2015, is expected to be completed this year.

MMG will consider the review and results from trial ore processing in making a final investment decision regarding the development of the Dugald River project.