Chinese government company buys Peru Copper


By Laura Mandaro
Monday, June 11, 2007

Peru Copper Inc. said Monday it has agreed to a $792 million acquisition by government-owned mining giant Aluminum Corp. of China in a deal that takes out one of the few remaining independent copper-mining companies.

Vancouver-based Peru Copper, which has an agreement to develop copper deposits in the South American country's Toromocho project, said it has received a friendly takeover bid valuing the company at $6.22 a share (C$6.60) in cash.

The offer represents a 21% premium to Peru Copper's 20-day volume-weighted average trading price on the Toronto Stock Exchange, the company said.

Peru Copper's U.S.-listed shares rose 3% to $6.15 a share in morning trading.

Aluminum Corp. of China, or Chinalco, owns one of the world's biggest aluminum producers, known as Chalco. Chalco produces 9.2% of the light metal, just a notch down from Alcoa Inc. and its 10.9% share, according to consultancy CRU.

But parent Chinalco is a much smaller player in copper, not even ranking in the top five among world producers, which is dominated by Chile's state-owned Codelco and by U.S.-based copper producer Freeport McMoRan Copper & Gold.

Controlling shareholders have sizable stakes in other, smaller copper companies, making buyouts a hurdle. Grupo Mexico, for instance, owns 75% of Southern Copper Corp., based in Phoenix.

Meanwhile, China has become the world's largest consumer of copper due to its own infrastructure needs and its role as an exporter of products like air conditioners and auto-motor parts. Last year the country used 4 million metric tons of copper, or about 22% of the world's supply. That's up from 10% a decade ago, according to industry estimates.

"This is an important step in our strategic growth outside China," said Yaqing Xiao, Chinalco president, in a statement released by Peru Copper. "We look forward to identifying investment opportunities in Peru and around the world," he said.

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