Metal Minings News

German copper producer Norddeutsche Affinerie (NA) plans to complete its takeover of Belgium’s Cumerio by mid-April, it said.

The company has accumulated over 95 percent in Belgium’s Cumerio following the tender period and will soon proceed with the squeeze out period of 15 banking days.

“We are right on track with the takeover of Cumerio and are delighted that so many shareholders share our vision of a common, strong copper company. Now we will concentrate to merge both companies into a powerful unit,” said Bernd Drouven, NA’s ceo, in a statement.

Integration teams will identify the specific strengths of both companies and will merge corporate functions, said the company.

NA announced last June it was aiming to bid for Belgium’s Cumerio at €30 ($40) per share in cash in a deal that Werner Marnette, the German company’s then-ceo, said would lead to consolidation among copper producers.

The proposed deal was at almost a 30-percent premium to Cumerio’s closing share price on June 21 and valued the Belgian company at €771 million ($1 billion).

The two companies together produce about 1 million tpy of copper cathode and employ around 4,600 people. Their production sites are located in Germany, Belgium, Bulgaria, Italy and Switzerland.

Ivanhoe Mines Ltd said on Wednesday its first estimate for the Heruga Deposit in southern Mongolia is for least 8 billion pounds of copper and 13.4 million ounces of gold.

The initial estimate for the copper, gold and molybdenum deposit, on the southern boundary of Ivanhoe’s Oyu Tolgoi copper and gold project, showed a 760-million tonne inferred resource grading 0.48 percent copper and 0.55 grams per tonne of gold using a 0.60 percent copper equivalent cut-off grade.

“Heruga may allow for considerably more flexibility in developing the massive Oyu Tolgoi deposits as well as a molybdenum circuit in the mill,” Ivanhoe Chief Executive John Macken said in a statement. “It may also provide the basis for a significant extension, over time, to the milling operations.”

Ivanhoe holds a 60 percent stake in the joint venture with Entree Gold, which covers about 40,000 hectares (98,840 acres) of Entree’s Shivee Tolgoi property. Ivanhoe earned the interest by spending more than $27.5 million on the properties to date and can increase its stake to up to 80 percent by spending $35 million before November 2012.

Ivanhoe owns about 15 percent of Entree’s shares and Rio Tinto, Ivanhoe’s Oyu Tolgoi partner, holds about 16 percent of its outstanding shares.

Copper prices should stay high despite a slowing U.S. economy, as China keeps buying the metal and big miners gobble up smaller, capital-hungry rivals, the head of Freeport-McMoRan Copper & Gold Inc said on Monday.

“We’re actively looking for exploration projects around the world because we have such a positive outlook for copper,” Chief Executive Officer Richard Adkerson told the Reuters Global Mining Summit in New York.

“The industry will continue to consolidate; it’s just inevitable because of the lack of investment opportunities,” he said, when asked about the credit crunch that is making it difficult for companies to raise capital.

Although he stressed Freeport was looking mostly to grow organically, as a result of the mines it acquired in last year’s $26 billion acquisition of rival Phelps Dodge, he did not rule out further merger activity.

“There is unquestionably, a challenge today in raising capital for virtually any business,” he said. “We see it as an issue that might lead to opportunities for companies like us.

“If this credit market was in place last year, we couldn’t have done it (the Phelps Dodge deal),” he said, noting that Freeport took on $17 billion debt to do the transaction.

Asked about the prospects for the copper market, which has seen the price of the metal rise more than six-fold in four years, Adkerson was bullish, although he declined to forecast the price. It closed at $3.79 per pound in New York on Monday.

“Trying to predict commodity prices is a dead man’s game. I wouldn’t be surprised if we had $5 copper but I wouldn’t be surprised if we had $2.50 or $2 copper,” he said.

“The conditions are there for an extended cycle in the copper industry,” he said of the market which is mainly driven by industrial growth in China which has gone from consuming 10 percent of world’s copper in 2003 to 25 percent today.

The only thing he could see that might upset the cycle would be “some sort of event or political situation in China that disrupted things significantly.”

The demand for copper is down in the United States because of the housing crisis and the credit crunch.

“The question is now how long will the slowdown persist in the housing market and it’s likely to be some time,” said Adkerson.

“We are seeing less copper use from residential home construction and the weakness in the U.S. auto industry but that’s been offset by China and other countries.

“It’s striking to me that with all of the issues in the U.S today - a credit crunch (and) we may be in a recession, and yet the copper markets are so strong.”

Adkerson also told the summit that Freeport is in talks with the government of Democratic Congo and is confident its huge copper-cobalt mine project there will get the go-ahead.

“We believe that the government will feel that it’s advisable for a company like ours, with the technical capabilities we have (and) the track record of developing other projects, to go forward with this one,” he said.

Congo’s Mines Ministry completed a review of the terms of 60 mining contracts last month and wrote to Freeport and other companies with projects in the central African nation telling them of the findings.

Adkerson stressed that there was no real possibility that Kinshasa would void the contract or nationalize the Tenke Fungurume project, which Freeport considers to be one of the world’s biggest copper and cobalt deposits.

“Recently, the government has been encouraging us to go forward with the project and we are,” he said. “We are in construction and not delaying anything under the view that we will reach a resolution of the issues.”

Europe’s largest copper producer, Norddeutsche Affinerie (NA), is upbeat about conditions in key markets in coming months including higher concentrate treatment and refining charges.

“We are viewing the coming months with great confidence,” CEO Bernd Drouven said. “The market conditions for Norddeutsche and Cumerio are continuing to develop favourably.”

Norddeutsche is close to completing its takeover of Belgian copper producer Cumerio and holds over 90 percent of the Belgian firm, he said. He expected the buyout of remaining shareholders to be completed in mid-April.

In a speech delivered at Norddeutsche’s annual shareholders meeting, Drouven did not comment on a major decision by German’s cartel office on Thursday to order Austrian copper producer A-TEC Industries to sell its 13.75 percent stake in Norddeutsche.

The antitrust ruling would prevent A-TEC making any takeover bid for Norddeutsche, analysts believe.

Drouven said the decision meant A-TEC would not be permitted to vote at Friday’s shareholders’ meeting.

He added that the outlook for copper concentrate TC/RCs, scrap copper supplies and demand for copper products was positive. TC/RCs are charges paid by mines to smelters to refine concentrate into metal and are a key part of Norddeutsche’s earnings.

“Our most important raw materials markets are in very good shape, concentrate treatment and refining charges have risen slightly in the last few months,” he said.

“We believe that the TC/RCs will again rise in the second half of 2008 compared to the same year-ago period. This is because the mining companies are expanding production and new mines are coming into production, so the tight supplies of concentrate will be eliminated.” Scrap copper supplies and charges for smelting scrap remained at a high level.

The merger of Norddeutsche and Cumerio will create a global force with around two million tonnes of annual copper concentrate processing capacity with capacity of around one million tonnes of copper products a year. Drouven believed integration of the two companies would be achieved rapidly.

Following the Cumerio takeover, Norddeutsche was considering further expansion outside Europe, he said. “To build on our strong position in Europe we are planning the completion of further acquisition opportunities, for example in Asia and South America,” he added.

“There we see the greatest chances to develop locations in growth markets.”

But Drouven said Norddeutsche had abandoned plans announced last year to build a copper recycling smelter in the U.S. The feasibility studies had shown that the U.S. exported most of its scrap copper. This meant scrap supplies for a U.S. recycling smelter would have to be transported over long distances which would increase costs, he said in answer to a shareholder question.

China’s Jiangxi Copper plans to produce 700,000 tonnes of refined copper this year after making up for a production lost during an unusually harsh winter, the company’s general manager, Li Yihuang, said on Wednesday.

The company, parent of listed Jiangxi Copper Co Ltd and China’s largest copper producer, will be able to fully make up for lost refined copper output in the first quarter, Li said.

Unusually heavy snowfall early this year disrupted transport and forced Jiangxi Copper to briefly reduce mine and smelter operations.

Too much copper concentrate production was lost to be made up in the first quarter, but the company still expects to make up the difference during the rest of the year. “There will be no big impact,” Li said.

Jiangxi Copper now produces about 38 percent of the concentrate it uses and Li said he would like to see that proportion rise above 40 percent.

Jiangxi’s overseas mine investments would begin to supply copper ores in three years’ time, he said. It has stakes in copper mines in Peru, Afghanistan and Pakistan.