The firm, dubbed the China Non-ferrous Metal International Mining Company, is composed of nine copper producers, including the largest domestic copper firm Jiangxi Copper Industrial Corp and some geological survey institutions and design companies. China Non-ferrous Foreign Construction Corp (CNFC), which operates China's first overseas copper mine in Zambia, takes a controlling 24.7 per cent stake in the new company.

The company aims to either buy stakes in existing overseas copper mines, or directly operate them, it said in a statement.

But analysts said domestic companies lack funds to buy or develop overseas mines at present, although it is inevitable that China will find more reserves from outside to meet growing copper demands.

China imports half of the copper concentrates, the raw material to produce copper, that are needed for its copper production. Imports have been increasing as copper consumption has surged by 15 per cent annually, driven by strong economic development. Last year, the imports of copper concentrates hit 2.25 million tons, rising by 24.3 per cent year-on-year. A CNFC official said linking to overseas copper mines could guarantee the stable supply of copper concentrates for domestic producers.

But analysts said developing a mid-sized copper mine in other countries may absorb an investment of US$1 billion, which no domestic company can afford.

"Siphoning overseas copper resources is necessary but too expensive," said Yang Changhua, an analyst of China Non-ferrous Metals Antaike Information Centre.

The CNFC official said the company is seeking to develop three or four existing copper mines in neighboring countries like Indonesia, Myanmar, Mongolia and Kazakhstan.

It is also contacting foreign companies to buy stakes in their copper mines.

"We have consolidated the resources of the best domestic copper companies," said the official. "We will borrow loans to finance the potential deals."

Pan Jiazhu, vice-chairman of the China Non-ferrous Industrial Association, urged the government to embark on special funds to encourage domestic companies to seek overseas copper resources.

"The government should provide preferential policies like tax breaks and subsidies to fund the companies' expansion," said Pan.

(China Daily August 29, 2002)