Chinese metal companies have stepped up acquisitions of overseas resources, locking in ore supplies as the country builds skyscrapers, power grids and railways. Playing a vital role in filling China’s future copper needs, Peru is positioned to become the world’s second biggest supplier of the metal.
China has snapped up mines — from Australia and Africa to South America — at a discount amid slumping metal prices. Chinese companies’ purchases of mines overseas have focused on iron ore, copper and bauxite, according to data from the Ministry of Commerce.
Investments in mining resources abroad surged to US$24.8 billion in 2014 from US$1.8 billion in 2013, and deals accelerated last year as commodity prices tumbled.
Peru has capacity for vast output growth, with only 4 percent of land available for mining in use as of 2014. The country holds 10 percent of global copper reserves, 13 percent of zinc, 8 percent of lead and 19 percent of silver.
Copper projects account for 60 percent of Peru’s metals mining total. Chinese companies own three copper projects in Peru: MMG’s Las Bambas, Chinalco’s Toromocho and Jiangxi Copper’s El Galeno.
After Las Bambas starts production, Peru may take China’s spot as the second largest copper producer worldwide.
The views expressed in this article are those of Yi Zhu, an analyst at Bloomberg Intelligence.
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