Jinchuan Group Expecting $292 mln in Net Profit in 2009

BEIJING, Mar. 13 -- Jinchuan  Group  Ltd., China's largest  nickel producer, expects a net profit of RMB 2 billion ($292.66million) in 2009, which will represent a decline of more than 50% from that  recorded  in  2008, a company employee told Interfax on March 12th.

    "With the backdrop of the global economic downturn and a slump in nickel prices,  we  can  only  expect a moderate net profit this year. Jinchuan Group recorded  a  net  profit  of  RMB 4.2 billion ($614.58 million) in 2008," a company employee, who asked to remain anonymous, said.

    According  to the employee, the company is also aiming to produce around 120,000  tons  of nickel, up 20% YoY, and generate sales revenue of RMB 50 billion ($7.32 billion) in the year ahead.

    "Jinchuan Group's decision to increase production this year may be aimed at reducing overall production costs through greater economies of scale.

    Jinchuan  Group  can  always  bide its time and sell its nickel products when the  market  rebounds," Fan Runze, an industry analyst said.

    The source  said  that  Jinchuan  Group will continue to seek offtake or stake acquisition opportunities in overseas nickel projects,  but declined to comment on any projects yet to be finalized.

    Fan noted  that Jinchuan Group will likely pursue resources from Canada, Australia  and  the  African continent, where high-grade nickel deposits are usually found.

    Currently, Jinchuan Group holds offtake agreements with Australian Stock Exchange-listed   Fox  Resources,  Albidon  Ltd.  and  OZ  Minerals  for concentrate supply.

    "Jinchuan Group's overseas nickel supply may be impacted due to the mine closure  at  Albidon's  Munali  Project  in the Republic of Zambia," Fan said.

    Jinchuan  Group  is  one of the companies that are in talks with Western Areas NL,   another   Australia-based   nickel   producer,   for  nickel concentrate  purchases,  a  source  close to Western Areas, who asked to remain anonymous, said.

    Western  Areas,  which  owns  the  Forrestania Nickel Project in Western Australia  that  has  total  nickel  metal  resources of 75,000 tons, is looking  for  a  short-term offtake contract for between 10,000 tons and 15,000 tons   of  nickel  concentrate  per  annum  commencing  in  2010, according to a Western Areas announcement on March 12.

    Jinchuan  Group's  ex-works  nickel  prices  stood at between RMB 86,500($12,657.49)  per  ton  and RMB 87,000 ($12,730.65) per ton on March 12th, down RMB 500 ($73.16) from the previous trading day.

    (Source: INTERFAX-CHINA)