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January 17, 2008 |
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JIANGXI COPPER: Will Purchase Parent's Assets to Boost Profit Jiangxi Copper Co. plans to buy assets from its parent -- Jiangxi Copper Group -- to boost faltering profits and asked for shares to be suspended in Shanghai and Hong Kong starting January 16 pending further announcement, Xiao Yu writes for Bloomberg News. According to the report, Jiangxi Copper disclosed to the Hong Kong stock exchange that it plans to sell shares in China as part of the proposal. Bloomberg notes that the company, facing declining profits because a lack of ore forces it to buy two-thirds of raw materials, may buy mines from its parent producing lead, zinc and copper. China wants state-owned companies to inject assets into publicly-traded units to improve competition and transparency, the report adds. Jiangxi Copper Group, owns the Yinshan lead and zinc mine and the Dongxiang copper and gold mine, Bloomberg notes, citing Cazenove Asia Ltd. Buying them would boost the traded unit's copper reserves by 16%, gold reserves by 52% and silver reserves by 27%, the brokerage further told Bloomberg. Jiangxi Copper rose 9% to close at CNY66.85 on Tuesday on the Shanghai Stock Exchange on speculation it would announce the purchase soon, Bloomberg relates. The stock has risen almost fivefold in the past 12 months, compared with the 136% gain on the key CSI 300 index. Bloomberg says that the company didn't say when it would make the announcement. Jiangxi Copper, Bloomberg recounts, posted a 16% decline in third-quarter profit in October as processing fees fell. Jiangxi Copper buys two-thirds of the copper concentrate it processes to make the metal used in wires and pipes, and needs to acquire more mines to cut reliance on imports, Bloomberg explains, citing analysts. Jiangxi Copper Company Limited -- http://www.jxcc.com/ -- is an integrated producer of copper in the People's Republic of China. The company's operations consist of copper mining, milling, smelting and refining to produce copper cathode and other related products, including pyrite concentrates, sulphuric acid and electrolytic gold and silver. It also provides smelting and refining services pursuant to tolling arrangements for customers. Xinhua Far East China Ratings gave the company a BB+ issuer credit rating. |
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