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Mitsubishi Materials May Boost Copper Mine Spending for Supply
May 21,2010 08:46CST
industry news

May 20 (Bloomberg) -- Mitsubishi Materials Corp., Japan's third-largest copper producer, plans to raise the procurement rate for raw material from its own mines to more than 75 percent as China competes for global supplies.

"We'd like to increase our stakes in some existing mines or invest in new projects," Nobuhiro Takayanagi, general manager at the company's overseas project department, said yesterday in an interview. "This would help secure stable supplies of copper concentrate for our smelters in Japan and bolster earnings." He gave no timeframe.

China's economy expanded 11.9 percent in the first quarter, the most in almost three years, boosting demand for raw materials. Shortages of copper ore, driven by expansion of smelting capacity in China, will persist through at least 2014, according to researcher CRU Group.

The company plans to raise its procurement rate to 75 percent by June 2011 when a Copper Mountain Mining Corp. project begins operations, Takayanagi said. The producer now secures about 60 percent from four overseas mines, he said. Mitsubishi Materials has a 25 percent stake in the British Columbia mine 75 percent owned by Canada's Copper Mountain Mining.

"It's increasingly important for smelters to raise the procurement rate from their own mine investment to close to 100 percent because of deteriorating processing fees" paid by mining companies, Shinya Yamada, an analyst at Credit Suisse Group AG, said today by phone.

BHP Billiton Ltd. and Freeport-McMoRan Copper & Gold Inc. won a 38 percent cut in processing fees this year from smelters.

Increased Supply

Mitsubishi Materials has a 1.25 percent stake in Chile's Escondida, the world's biggest copper mine, a 10 percent share in the Los Pelambres project, 31.25 percent of Canada's Huckleberry deposit and 1.75 percent of Indonesia's Batu Hijau, according to company data.

"From some mines, we are taking more concentrate than our equity investment," Takayanagi said.

In Japan, the company operates the Onahama smelter, north of Tokyo, with a capacity of 258,000 metric tons of refined copper, and the Naoshima smelter in western Japan, with 225,000 tons. The producer has a 50 percent stake in the Onahama smelter.

The two domestic smelters process an average of about 1 million tons of ore each year. The company produced 302,000 tons of refined metal in the year ended March 31.

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