Sep 15, (Reuters) -
China's top copper producer Jiangxi Copper Corporation is unlikely to build new smelting capacity until it secures concentrates supply, including from a major Afghan project, a company official said on Wednesday.
It now expects the construction of the Afghanistan mining joint venture to be completed between 2014 and 2015, later than the previous 2014, the official with direct knowledge of Jiangxi Copper's investments said.
"If the supply of raw materials is not confirmed, we will not consider (new smelting capacity)," he said, of copper concentrates, which are smelted for refined metal production.
But he said the company will continue to pursue an expansion of its 900,000 tonnes of annual refined copper capacity.
The company bought a 5 percent stake in smaller rival Yantai Penghui Copper Industry this year, which has annual capacity of 120,000 tonnes of refined copper.
Jiangxi Copper and Yantai Penghui may set up a joint venture to build a smelter with 300,000-400,000 tonnes of annual capacity in an industrial park near the Yantai port in the northeastern province of Shandong and eventually buy the majority shares in Yantai, a source familiar with the matter said.
He added Yantai Penghui was required by the local government to remove the existing smelter following increased urbanization in the city and planned to use the new smelter to replace the old one. He did not provide the timeframe.
Jiangxi Copper is the parent of listed Jiangxi Copper Company Ltd (0358.HK) (600362.SS).
In March the listed arm's chairman, also the parent's president, Li Yihuang said if the company purchased Yantai Penghui, it would use Yantai's smelting capacity to process Jiangxi Copper's concentrates from overseas, including Afghanistan and Peru, given the smelter's location in a port city.
That suggested the Aynak copper mining project in Afghanistan is critical to Jiangxi Copper's investment in Yantai.
The mining project is 25 percent owned by Jiangxi Copper and 75 percent by Chinese mining and construction firm Metallurgical Corp of China (1618.HK), and the expected construction completion time has been delayed repeatedly, from end-2011, then 2013, and now 2014-2015.
Once Aynak copper mine starts production, it is expected to annually produce 401,000 tonnes of concentrate in the first year, 493,000 tonnes both in the second and third year, and 987,000 tonnes in the fourth year, according to MCC's estimate.
In 2010, Jiangxi Copper would use concentrates containing 464,000 tonnes of copper, of which just about 35 percent would come from its mines, and scrap containing 416,000 tonnes of metal for refined copper production.