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China Pays Full Price For Peruvian Copper Mine But Locks Up Long-Term Supply
From International Business Times
By Sophie Song
April 15, 2014
China reached all the way to Peru to secure fresh stocks of copper to ensure its supply of the metal at home for the long term despite its current economic slowdown and some recent unprofitable ventures when a group led by the state-controlled China Minmetals Corp. announced on Tuesday that it agreed to pay $5.85 billion in cash for a major mine.
In striking what stands as its largest purchase of mining rights in six years, China has effectively served notice that it intends to continue using corporate mergers as a means to ensure access to raw materials to fuel its relentless industrial expansion and investment in infrastructure. Copper is valuable as it is necessary for making a wide range of modern products, from wires used for electronics to piping essential to building construction.
“There will be significant demand for copper in China for the next 20 years,” said Kevin Gallagher, an expert on international political economy at Boston University and author of “The Dragon in the Room: China and the Future of Latin American Industrialization.”
“Why not have Chinese companies go global and meet that demand?” he said.
Some skeptical experts have supplied an answer to that question: Because it might be a waste of China’s prodigious savings. As China’s state-owned Goliaths have in recent years scoured the globe in pursuit of oil, iron ore, natural gas and other critical raw materials — frequently taking controlling shares in production — some economists have noted that the Communist Party-led government has effectively paid a premium to buy goods that trade freely on international commodities markets…
Read the full article at: www.ibtimes.com