Trafigura has agreed to buy a 30% stake in Jinchuan Group’s 400,000-tpy Fangcheng copper smelter, in a major inward investment for China’s metals industry.
The deal includes a multi-year contract for supply of concentrate and off-take of cathode, both corresponding to Trafigura’s 30% stake. That implies 120,000 tpy of cathode to be marketed by Trafigura from the smelter, which started up in October last year. No financial details of the investment were given.
“We will bring our long-term relationships with producers, reliability and commercial experience to this partnership. We are proud to be the first international trading firm to make a major co-investment in a Chinese domestic smelting business,” Simon Collins, Trafigura’s head of nonferrous and bulk materials, said.
China’s metals industry has traditionally been resistant to foreign investment, particularly in base metals production where state-owned enterprises – such as the Jinchuan Group – are dominant.
Jinchuan has previously said it has plans to expand the Fangcheng smelter to 600,000 tpy. It is also planning to build a 200,000-tpy nickel pig iron plant.
“The organisations have joined hands to bring into play their respective advantages. This will enhance the market competitiveness of Jinchuan in Guangxi and widen the areas of cooperation between the two organisations,” Yang Zhiqiang, Jinchuan Group’s chairman, said.
“We expect that this new partnership will help promote local economic and social development and achieve a win-win cooperation,” the chairman added.
Fangcheng is a port city in southern China’s Guangxi province and plays an important role for commodity transportation and into Guangxi and other southern provinces such as Yunnan and Guangdong.
In 2013, the port took in about 282,100 tonnes of copper concentrate, according to figures on the Guangxi government’s website. Trafigura has operated warehouses in Fangcheng since 2011 after making an investment of $20 million.
“We have worked with the Jinchuan Group for many years and through this agreement we will further strengthen our relationship with them. Jinchuan Group has an excellent reputation in non-ferrous mining and smelting industries, both in and outside of China,” Claude Dauphin, Trafigura’s chairman and ceo, said.