Yunnan Copper Industry (Group) Co Ltd, the third-largest copper smelting and refining enterprise in China, and Hong Kong-listed investment company Regent Pacific Group Ltd plan to invest in a copper mine in Simao, Southwest China's Yunnan Province, according to Regent Pacific's website.

The contract indicates that the two partners will inject 400 million yuan (US$49.45 million) into the joint venture, called Dapingzhang Mine. Yunnan Copper's fully-owned subsidiary, Yuxi Resources Corporation, and Regent Pacific's Regent Metals Ltd will hold 50 per cent and 40 per cent of the firm respectively. The mine's original owner, Simao Shanshui Minerals Ltd, will own the remaining 10 per cent.

The joint venture will explore and develop mineral resources over the next 20 years, a term that could be extended. A series of feasibility studies are planned over the next 12 to 24 months to confirm reserves at the mine, assess methods of extraction and recommend spending on expansion and mine design.

The venture may need further investment of US$60 million, which may be financed through cash or bank loans, Jamie Gibson, chief executive officer of Regent Pacific, told Bloomberg news yesterday.

Current production from the mills at the site is an average of 3,000 metric tons of copper ore a day and may reach as much as 15,000 tons at full capacity, according to Gibson.

He also said Regent Pacific "will focus on mining investments in non-ferrous and precious metals over the next two years because we believe in the opportunities here."

However, President Zou Shaolu and Administrative Director Shu Yongsheng, both of Yunnan Copper, declined comment on the deal.

Meanwhile, China's State Reserves Bureau said early this month that releases of State copper reserves would exceed market expectations, a move aimed at relieving a shortage of copper and to discourage rapid expansion by copper smelters attracted by high returns.

China has reined in the steel and aluminium sectors this year, as the central government believes expansion is wasteful investment.

Zou of Yunnan Copper said two weeks ago that the government's policy to slow the expansion of copper was aimed at smaller private companies looking to take advantage of rising prices, and not larger companies.

Copper futures prices on the Shanghai Futures Exchange ranged between 37,600 yuan (US$4,648) and 38,000 yuan (US$4,697) a ton yesterday, up from 16,000 yuan (US$1,978) a ton in October 2003.

"The government's policy aims to support large-scale enterprises and regulate the industry," Zou said. "I believe for Yunnan Copper and other leading copper enterprises the policy will not have any impact."

(China Daily 11/24/2005 page9)