China Aluminum's "Joint Venture" Prospecting in China Ensures Supply of Resources from Copper

“China is still a net importer of iron ore at this stage, and the most important markets for iron ore exports from miners are also in China. Therefore, Chinese companies and miners will eventually maintain a good interaction and commercial cooperation.”

On November 25th, the Australian mining giant Rio Tinto stated in an e-mail to the “International Finance” reporter that Rio Tinto and China Aluminum (7.92, 0.00, 0.00%) companies (hereinafter referred to as “China Aluminum”) were The China-based joint venture company, Chinalco Rio Tinto Exploration Co., Ltd. has recently obtained industrial and commercial registration, and will officially start business activities in China to carry out mineral exploration business.

The establishment of a joint venture exploration company is another important cooperation project between Chinalco and Rio Tinto following the decision to jointly develop the Ximandu iron ore resources in West Africa. In response, Bao Yi'an, president of Rio Tinto China, is very excited. "This marks an important milestone in the cooperation between Rio Tinto and Chinalco," the press release quoted Bao Yi'an as saying, "a joint venture company can create a valuable opportunity for both sides to achieve mutual benefits."

Guaranteed resource supply

Since last year, Chinalco and Rio Tinto have been working hard to promote the establishment of a joint venture exploration company. However, until June this year, the two parties signed a formal joint venture exploration contract. Five months later, both parties officially obtained the business registration.

Rio Tinto’s press release shows that among the joint venture exploration companies, Chinalco has a 51% stake, Rio Tinto has a 49% stake and its headquarters is located in Beijing, China.

In the press release, Rio Tinto also said that “Chinalco has appointed three directors, including a board of directors**, and Rio Tinto has appointed the CEO and two directors.” According to currently published information, the joint venture’s The chief executive is Jian An Zhun, who told the media at a mining conference earlier this month that “the establishment of a joint venture will enable Rio Tinto to better enter the mainland of China for the exploration and development of mineral resources.” Another determination The candidate is Wang Dongsheng, chairman of the joint venture exploration company. His position at Chinalco is the general manager of China Aluminum Mineral Resources Corporation.

In the eyes of people in the industry, it is not surprising that Chinalco and Rio Tinto have established joint ventures. On the one hand, Chinalco is currently the largest single shareholder of Rio Tinto, holding approximately 9% of Rio Tinto's shares, belonging to its “owner” and being only one step away from the acquisition of Rio Tinto; on the other hand, it is exploring In the field of exploration and exploitation, both Rio Tinto and Chinalco have relatively advanced exploration and engineering technology services. Chinalco, as a resource-centric enterprise, is extremely familiar with China's resources, especially in terms of business, Chinalco has long since started from the traditional aluminum industry. Expanded to other resource areas such as copper, coal, rare earths, and iron ore, this will also be complementary to Rio Tinto.

Bao Yi'an also said that “China has abundant mineral resources and has good geological conditions for the development of world-class resources.” He said that Rio Tinto has first-rate expertise and valuable global mining experience. The joint venture exploration company will leverage on both sides’ expertise to realize common goal.

“The establishment of Chinalco Rio Tinto Joint Venture Exploration Co., Ltd. is a major action for deepening cooperation between Chinalco and Rio Tinto.” Wang Dongsheng emphasized that the establishment of a joint venture exploration company is an important move for Chinalco to implement strategic transformation and is a response to Chinalco’s response to the Ministry of Land and Resources. An attempt to comprehensively promote the new mechanism of geological prospecting.

Wang Dongsheng said that the cooperative company will give full play to the comprehensive advantages of Chinalco and Rio Tinto, China, and the West in resource exploration, seek world-class mineral resources, and enhance China's domestic resource guarantee and supply capacity.

First focus on copper exploration

Perhaps because of the consideration of “enhancing China's domestic resources to secure supply capacity,” the joint venture exploration company will first focus on copper resources. According to analysts, most of China’s copper mines rely on imports, and they also import large quantities of refined copper to make up for the lack of domestic production capacity. The data also shows that in October this year, China’s copper imports hit its highest single month since May 2010.

Wang Lixin, a joint metal network analyst, told the "International Financial News" reporter that as a key industrial metal, global copper resources are facing the reality of a long-term supply shortage, and thus "copper resources have long-term strategic value." The data released by the International Copper Research Group and the UK’s Commodity Research Institute (CRU) all show that before 2012, the global copper supply is unlikely to increase significantly, and the growth rate may remain below 2.5%, but the global copper demand growth is still At a rate of 3.3% a year.

However, focusing on copper resources is only part of the joint venture exploration company plan. Rio Tinto’s press release also revealed that “planned to expand coal and potash in the future.”

In this regard, analysts told the "International Finance" reporter, the latter two are also wise choices for joint ventures. In the field of coal, in 2009, China became the first net importer of coal from a net exporter of coal, and the demand for coal is also difficult to decline in a short period of time. In terms of potash, China has been the world’s largest net importer of potash fertilizer in recent years. In a sense, to some extent, China's food security is not entirely in the hands of the Chinese people.

It is worth noting that from the current public information and press releases released by Rio Tinto, the two sides did not discuss the exploration business in the iron ore field.

However, this does not prevent Chinalco and Rio Tinto from cooperating in the iron ore business. On July 30 last year, Chinalco and Rio Tinto signed a high profile agreement to jointly develop a "world-class iron ore mine" in Guinea, Africa. Simandu project. For this project, both parties also set up a joint venture company (China Aluminum accounted for 47% of shares, Rio Tinto accounted for 53%), and plans to sell iron ore products to the Chinese market. In addition, at the end of February this year, Chinalco also published information on the official website that "Chinalco held the first ship imported iron ore receiving ceremony at Lianyungang (5.27, 0.00, 0.00%) New Land Bridge Terminal."

Miners are all in action

In fact, not only did Rio Tinto's joint venture exploration company with Chinalco attract attention, but China’s projects in Vale also attracted attention.

The media recently quoted authorities in Qingdao as saying that “the attitude of the steel mills and the China Steel Association has changed, and the cooperation between the Vale and the Dongjiakou Port of Qingdao Port on the logistics distribution center project is planning to restart.” It is understood that The distribution center was favored by some analysts. But last year, under the collective opposition of the Chinese steel companies and the China Steel Association, China’s distribution center in Vale was temporarily suspended, but now, the plan has at least “reappeared”. .

At present, BHP Billiton may not be the only project in China. However, at the end of May this year, BHP Billiton told the "International Financial News" reporter that it is cooperating with other parties such as Peking University to sponsor and support relevant training programs and contribute to "cultivating and supporting the professional development of Chinese government civil servants."

In the eyes of people in the industry, in addition to the "sad emotional" iron ore, the miners and China have maintained a good benign interaction. And Jia Liangqun, chief analyst of “My Steel” Network, once stated that China is still a net importer of iron ore (this year is expected to import 600 million tons or more), and the most important market for iron ore exports by miners is also In China (around 70%), Chinese companies and miners will eventually maintain good benign interaction and commercial cooperation.