Bloomberg News

Chinalco Said to Seek $1 Billion in IPO of Peruvian Unit

May 10, 2012

A worker walks at Chinalco's mining operations at the Toromocho Project in Morococha, Peru. Photographer: Karel Navarro/Bloomberg

A worker walks at Chinalco's mining operations at the Toromocho Project in Morococha, Peru. Photographer: Karel Navarro/Bloomberg

Aluminum Corp. of China, the country’s biggest producer of the metal, may start a $1 billion initial share sale this month in Hong Kong of its Peruvian copper mining unit, said two people with knowledge of the matter.

The Hong Kong stock exchange may consider the listing plan of Chinalco Mining Corporation International next week, said the people, who declined to be identified because the information is private. The IPO will probably raise $800 million to $1 billion, they said.

Beijing-based Aluminum Corp., or Chinalco, is investing in copper, iron ore and rare earths as overcapacity and rising power costs shrink profit margins from aluminum smelting. Mining and basic material companies have raised a total of $1.6 billion in Hong Kong in the past year including Glencore International Plc, according to data compiled by Bloomberg.

Chinalco Mining may start gauging investor demand before the end of May should it get the exchange’s approval, the people said. Chinalco is developing the Toromocho project in Peru which it acquired the rights to in 2007 when it purchased Canadian company Peru Copper Inc.

Calls to the office of Yuan Li, Chinalco’s spokesman, went unanswered. Hong Kong’s The Standard newspaper reported the IPO today, without saying where it got the information.

BNP Paribas SA, China International Capital Corp. and Morgan Stanley will manage the sale, the people said.

Copper Reserves

Chinalco plans to invest $2.2 billion to develop the project which has 1.526 billion metric tons of reserves of copper, molybdenum and silver, according to the company’s website. It has a mine-life of 36 years, it said.

Construction began in May 2011 and operations may start in October 2013, processing 117,000 metric tons of copper ore a day, David Thomas, vice-president of the company’s Peruvian unit, said at a conference in Peru in September.

Chinalco has delayed an initial public offering of its engineering and construction unit in Hong Kong, the company said March 28.

Chinalco’s overseas assets also include a stake held by its unit Aluminum Corp. of China Ltd. in Rio Tinto Group’s Simandou iron ore project in Guinea, which it acquired for $1.35 billion.

To contact the reporters on this story: Fox Hu in Hong Kong at fhu7@bloomberg.net; Michelle Yun in Hong Kong at myun11@bloomberg.net

To contact the editors responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net; Philip Lagerkranser at lagerkranser@bloomberg.net


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