China, Chile sign agreement on copper cooperation

China and Chile signed a 550-million US dollar agreement Tuesday to cooperate on copper development.

Under the agreement, a joint venture will be established between China Minmetals Corporation and Corporacion Nacional del Cobre de Chile (CODELCO).

The two sides expected the maximum investment could be as much as two billion US dollars.

Ignacio Walker, visiting Chilean Foreign Minister, addressed the signing ceremony. He said that the economic and trade relationship between Chile and China has developed remarkably in recent years. The joint copper development project is a strong evidence of the bilateral friendly and cooperative ties.

The supply and sales network and the strategic alliance established between the CODELCO and China Minmetals will benefit both sides. It is a new form of financing for the joint project, Walker said.

According to the agreement, the joint venture company will function as a vehicle to secure long-term copper supply from CODELCO to China Minmetals. CODELCO also granted China Minmetals an option to acquire, at a market price, a minority equity interest in the Gaby copper project, which may be exercised by Minmetals when CODELCO decide to proceed with development.

In connection with this transaction, the two sides have appointed the China Development Bank as the lead organizer and underwriter for a term loan facility to the joint venture company. The proceeds of the loan will be used to partially fund the initial investment commitment.

"Closing of this transaction is subject to, among others, governmental and regulatory approvals, satisfactory financing terms being agreed, and execution of other definitive agreements," the agreement says.

Zhou Zhongshu, president of China Minmetals, said the company has consulted with CODELCO on the project for about two years.

"The alliance with CODELCO will allow Minmetals to receive a stable supply of copper source from the world's largest copper producer, and I believe this partnership will create a win-win situation for both of us," Zhou said.

China Minmetals is China's largest metal and mine product trading company. In 2004, it had trading volume of 38 million US dollars with Chilean enterprises and a total business revenue of 15 billion US dollars.

Copper is the second largest consumption item of non-ferrous metals in China. Statistics from China Customs showed that China imported 1.38 million tons of copper and 2.88 million tons of copper ore in 2004.

Source: Xinhua