Dowa to Invest in Copper Mines to Double Ore Procurement Rate

May 25 (Bloomberg) -- Dowa Metals & Mining Co., a unit of Dowa Holdings Co., Japan's fourth-largest copper smelter, plans to double the ore procurement rate from its mines to 30 percent in five years as it faces competition from China and India.

"To survive as a smelter in current conditions, it's important to invest in mines," Nobuo Yamazaki, the unit's president, said in an interview in Kyoto yesterday. "This will secure stable supplies as well as business returns."

China and India, the world's fastest-growing major economies, are driving demand for copper to build homes, cars and power grids. Expansion of China's smelting capacity has caused an ore shortage that will persist through at least 2014, according to CRU Group. Processing fees slumped 38 percent this year as smelters competed to process scarce raw material.

The company is looking for opportunities in mine investment including small and medium-sized projects to reach the 30 percent target, Yamazaki said at the Asian Copper Club meeting.

Dowa Holdings, in a venture with Sojitz Corp. and Furakawa Co., said March 23 it would spend $183 million to buy a 25 percent stake in the Gibraltar copper mine in British Columbia from Taseko Mines Ltd.

With the start of shipments from Gibraltar, the company plans to raise the procurement rate to 15 percent this year, Yamazaki said. Currently, the company secures 5 to 6 percent of its copper ore needs from Canada's Huckleberry mine.

Gibraltar Boost

Gibraltar produced about 115,000 tons of concentrate in 2009. Annual output will increase to 180,000 tons with the completion of the mine's expansion in 2010, according to Sojitz.

The company makes 100,000 tons of refined copper from the Onahama smelter, majority-owned by Mitsubishi Materials Corp., and more than 10,000 tons from recycling at its Kosaka plant.

Dowa, one of Japan's top three zinc producers, plans to increase the procurement rate from its mines for that raw material to 50 percent, including recycling, he said. The company will raise the rate to 20 percent from 15 percent at its Akita smelter this year and by 10 percent from recycling.