More than a trader

Since its founding, trade has been China Minmetals' major business operation. According to a report released by international management institute Roland Berger and Partner GmbH last May, 93 percent of its business revenues and 50 percent of its profit were from trade and other trade-related business.

As a result of the country's reform in foreign trade, China Minmetals' positioning as the country's major trader has decreased, said the report. Now, trade may no longer be a viable force propelling China Minmetals' development in a sustained and efficient way.

Since 2000 China Minmetals has begun acquiring resource companies, with the hopes of building itself into a large-scale comprehensive group.

For example, Guangxi Huayin Aluminum Co., with China Minmetals as one of its major investors, produced 1.6 million tons of alumina in 2007; and with a processing capacity of 60,000 tons, Huabei Aluminum Co. is the strongest aluminum foil producer.

China Minmetals has also been actively involved in the exploration of non-ferrous metals resources including tungsten and molybdenum mines in Guangxi Zhuang Autonomous Region, and other metals reserves in Guangdong Province, and silver and other metals reserves in Gansu Province.

In December 2009, China Minmetals acquired a 51-percent stake in the state-owned parent of Hunan Nonferrous Metals Corp., China's biggest producer of zinc and tungsten.

"The new Hunan Nonferrous Group will consolidate advantageous resources including tungsten, antimony, tin, rare earth, zinc and lead in the province," Zhou said.

In June 2009, China Minmetals took over part of Australia's OZ Minerals for $1.39 billion, gaining access to the world's second-biggest zinc mine in addition to supplies of copper, gold and nickel.  

Capital operation

Days after Minmetals Ltd. was established, the Minmetals International Trust Co. Ltd. was officially opened in Qinghai Province. The trust will launch and oversee a mining capital fund, said Ren Zhufeng, General Manager of Minmetals Finance and Chairman of Minmetals International Trust Co. Ltd.

For China Minmetals, product operation and capital operation are two important wheels pushing the development of its core businesses, said Zhou.

China Minmetals will take three steps in capital operation in the future: First, all the core business will go public; second, more mergers and acquisitions will be conducted; and restructuring for state-owned assets will be accelerated, said Zhou.

The recent establishment of Minmetals Ltd. was considered a strategic step toward the listing of its core business, said Deng Xinrong, an analyst of nonferrous metal with Beijing-based Founder Securities.