May 19, 2010 -- At the 60th anniversary ceremony of the founding of China Minmetals Corporation (hereinafter "China Minmetals") last week, Mr. Zhou Zhongshu, Secretary to President of China Minmentals, looked back at the splendid history of the group over the last six decades. He made an extensive summary of the fundamental experience of the development of China Minmetals over the past 60 years, and illustrated the grand blueprint depicting the group's development in the new era. Over the past 60 years, China Minmetals successfully evolved from an operating entity that carried out the tasks under national directive plans into a modern enterprise that strives for clear strategic goals against fierce market competition after years of hardship amidst continuous system reforms and economic transitions.

To China Minmetals, 2009 can be described as a "Year of M&A and Reorganization". As set forth in the Plan Regarding the Adjustment and Resuscitation of the Nonferrous Metal Industry launched by the central government, China Minmetals served as an industry representative to provide keen support to the general trend of industry consolidation. The successful acquisition of the second largest zinc producer in the world and the core assets of OZ Minerals, the third largest mineral company in Australia, and the completion of the restructuring of Hunan Nonferrous Metals Holding Group Co., Ltd. by China Minmetals last year have drawn much attention from the market, and are of great significance to the segment consolidation of China's nonferrous metal industry. This year, leaders of Hunan Nonferrous Metals Holding Group Co., Ltd, namely Cao Xiuyun, Li Li and Zhang Wenjian attended the meeting to support China Minmetals and further reinforce its partnership with China Minmetals.

The Plan Regarding the Adjustment and Resuscitation of the Nonferrous Metal Industry was promulgated by the State Council last year, which is an important document setting out the plans concerning the reorganization, structural adjustment as well as optimization and upgrading of China's nonferrous metal industry from 2009 to 2011. The plan called on the industry to maintain its steady operation in 2009 and get on the track of benign development in 2011, in a bid to set up 3 to 5 integrated conglomerates that boast international competitive strengths and enhancing industry concentration to further prop up the protection over primary metal materials.

Extend its business reach across the industry chain to consolidate its leading presence in the nonferrous metal industry

As one of the most established nonferrous metal resource enterprises in the PRC, China Minmetals has kept a relatively low profile in the capital market in Hong Kong as compared with renowned listed companies such as Chalco and JCC. However, its strength in the sector is not to be underestimated. Established in 1950, China Minmetals is a global giant mainly engaged in the development, manufacturing, trading and integrated service for metals and minerals, with sideline business in the financial, real estate and logistics sectors. In 2008, China Minmetals had in aggregate a US$27.7 billion business volume, RMB180.9 billion operating revenue and RMB7.1 billion profit. It was ranked 331 among the Fortune Global 500. China Minmetals offers a broad range of metals ranging from copper, aluminum, tungsten, antimony, tin, gold, silver, tombarthite and tantalum. As for its tungsten metal business, China Minmetals has a vested interest in tungsten and tungsten products in Jiangxi Province. With controlling interests in Jiangxi Tungsten Industry Group , Xianglushan tungsten mine in Xiushui and Nanchang Hard Alloy Plant, the company managed to establish a complete tungsten industry chain. As for its copper metal business, China Minmetals has formed long-standing and close partnership with KGHM and become the largest importer of electrolytic coppers in the PRC. It had also formed a joint venture with CODELCO as part of a joint effort to invest in copper resources in Chile. It also partnered with JCC to acquire Northern Peru Copper Corp. in Canada. Regarding its aluminum metal business, the Guangxi Huayin alumina project, a project with 1.6 million tonnes annual production capacity and invested by China Minmetals, had come on steam. Apart from the acquisition of 400,000 tonnes annual alumina production capacity from Alcoa for a term of 30 years, it was entitled to the mining right of 150 million tonnes of bauxite through the joint exploration of bauxite project in Jamaica. As the owner of North China Aluminum Co., Ltd. which has a 60,000 tonne aluminum processing capacity per year, it boasts the strongest consolidated production capability of aluminum foil in the PRC. China Minmetals is actively engaged in the exploration of nonferrous metal resources at home, including projects such as the tungsten-molybdenum polymetallic mine in Bobai and Luchun , tungsten polymetallic mine in Liangyuan and Nanshan in Guangdong and the Shitonggou silver polymetallic mine in Gansu.

Since last year, China Minmetals has seized the opportunities arising from the global financial crisis and invested over RMB10 billion in acquisition and merger of competitive mining companies at home and abroad. In December last year, China Minmetals announced the acquisition of the controlling stake in Hunan Nonferrous Metals Holding Group Co., Ltd.("HNG"), the parent company of Hunan Nonferrous Metals Corporation Limited ("HNC") (SEHK: 2626) and the largest tungsten-antimony and lead-zinc producer in China, at a consideration of RMB5,595 million, which was an eye-catching move in the market and industry. At aboard, China Minmetals succeed in acquisition of the core assets of OZ Minerals( the third largest mining company in Australia) last June, including the Century and Rosebery zinc-lead mines in Australia and the Sepon copper-gold-silver mine in Laos, which was the largest M&A deal successfully carried out by a Chinese company in Australian mining industry.

Hunan Nonferrous Metals Corporation Limited was incorporated in the PRC on 1 September 2005 and listed on the Hong Kong Stock Exchange on 31 March 2006. It mainly engages in the production and sale of nonferrous metals and has the exploration rights to such main mineral resources as tungsten, antimony, lead, zinc, bismuth and fluorite in Hunan. It has forged an industrial chain integrating mining, dressing, smelting and processing in such sectors as tungsten, antimony, lead and zinc. With regard to the upstream, HNG owns the largest reserve of tungsten and bismuth resources and second largest reserve of antimony in the world; in terms of the midstream, HNG is China's largest lead and zinc producer and the world's largest production base of antimony products; and in downstream processing, HNG is the world's largest producer of cemented carbide products by output, and occupies the largest share in the domestic market.

Joining forces of two market leaders to achieve great synergic effect

Benefits from the collaboration of China Minmetals and HNC are obvious and can be summarized as follows,

1. Tungsten and Antimony business

China Minmetals is currently the world's largest tungsten concentrate producer, its production capacity is several times more than HNC (which produces more than 6000 tonnes annually). Although HNC has the world's largest reserves of tungsten concentrate, the limited production quotas confines expansion in its production capacity. This has undermined the company's performance since its listing. On the contrary, with far less tungsten concentrate reserve, China Minmetals has been struggling to maintain its massive production volume. Working in complimentary, the two companies make a "perfect match" with each other. Moreover, HNC indicates the world's largest and China's first-class production capability in tungsten products and hard alloy, whereas, China Minmetals is so far the world's largest traders of tungsten products. The massive supply chain formed by the two companies could bring themselves up beyond any world-class players in the sector.

As for the antimony business, HNC owns the world's largest antimony ore mine, Hsikwangshan, and has just acquired another upscale antimony ore mine, the Beaver Brook Antimony Mine Inc. in Canada, also, it is currently the largest antimony product producer in the world. China Minmetals, on the other hand, being the world's largest Antimony product trader, shall again form a well-interlocking supply chain with HNC.

2. Lead and Zinc business

According to public sources, OZ's core assets acquired by China Minmetals includes a 18.2 million tonnes of zinc ore reserves, equivalent to 18.74% of the total zinc ore reserve of China in 2007, and 2.60 million tonnes of lead ore reserves, equivalent to 6.28% of the total lead ore reserves of China in 2007. Its annual production capacity of zinc concentrate and lead concentrate reaches approximately 730,000 tonnes and 100,000 tonnes respectively. Zhuzhou Smelter Group, the subsidiary of HNC has a total zinc and lead smelting capacity of 500,000 tonnes and 100,000 tonnes respectively. Nevertheless, the production capacity of Huangshaping lead and zinc mine, another subsidiary of HNC, remains at about 30,000 tonnes of lead concentrate. This leads to a largely unstable resources supply and staggering operating results of Zhuzhou Smelter Group.

In this regard, the collaboration of HNC and China Minmetal will bring great advancement in the industry in terms of perfection of the industry chain and integration of overall segment. Therefore, during the signing ceremony of the Restructuring Agreement of HNC, Mr Zhou Zhongshu, president of China Minmetals expressed with full confidence that this will bring the "New HNG" to become the "world's Leader in the tungsten-antimony business and lead-zinc business", and the "world's biggest producers of tombarthite".

3. Government Support

Being taken under the wing of the government is another "bright spot" for China Minmetals. As a state-owned enterprise, China Minmetals is better positioned to allure industry policy support from the State and run overseas projects than its counterparts. It has also accumulated extensive experience in operating and overseeing a conglomerate. As a regional enterprise which has now come under the wing of the central government, Hunan Nonferrous is set to build a brighter future.


About Hunan Nonferrous Metal Corp

Hunan Nonferrous Metals Corporation Limited, together with its subsidiaries, is an integrated producer of nonferrous metals, excluding aluminum, in the People's Republic of China. The Company is a producer of cemented carbides, zinc and antimony, as well as lead, silver, indium, tantalum and niobium. The Company operates in three segments: nonferrous metal mine site segment, which is engaged in the mining and trading of nonferrous metals; nonferrous metal smelting segment, which is engaged in the smelting and trading of nonferrous metals, and cemented carbides, and tungsten, molybdenum, tantalum, niobium and their compounds segment, which is engaged in the manufacture and trading of hard alloys and refractory metal compounds, such as cemented carbides, and tungsten, molybdenum, tantalum, niobium and their compounds. On October 13, 2009, the Company acquired a 100% equity interest in Beaver Brook Antimony Mine Inc. through its wholly owned subsidiary, HNC (Canada) Antimony Mine Limited. (ACN Newswire)

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