Rio Tinto Plc, the world's second-largest producer of iron ore, said on Wednesday it plans to form a joint venture with a Chinese exploration company to further tap into the nation's copper market, which relies heavily on imports.
"By forming such a joint venture, we can jointly explore, possibly, the world's largest copper-gold mine in Mongolia, because mining and exploration are where our strength is," said Ren Binyan, managing director of Rio Tinto China, without disclosing any more details.
The Anglo-Australian mining and resource group has also reached an agreement with the Mongolian government for mining the copper-gold deposits in Oyutolgoi, 80 kilometers north of the Mongolia-China border.
The Oyutolgoi mine can produce approximately 15.9 million metric tons of copper and 11 million ounces of gold, earlier reports said.
The move is a reflection of the company's ongoing efforts to rely less on its coal business for growth, as coal prices are an even bigger concern than that of iron ore, and instead focus on other sectors like copper and aluminum.
"It is a smart move because China has been relying on copper imports due to lack of high-quality copper-gold mines," said Li Xiaobei, a senior copper analyst at Sublime China Information Group Co, the Chinese commodities consultancy. "Copper mining is a long-term investment, which takes generally five to six years from exploitation to production, and in the years ahead, improving production will help feed the nation's copper demand."
China's copper-gold mining resources are scarce, with only some low-quality copper-gold deposits in Anhui, Yunnan and Jiangxi provinces. About 80 percent of the copper demand are met with imports from countries like Chile and Peru, she said.
"There is a huge potential for China's copper market, once the copper-gold mines in Mongolia are explored and put into production, it will largely feed the demand in the country," she said.
