It will be one to two years before China sees growth in demand for industrial metals despite a recent surge in prices, Wang Lixin, president of China Minmetals Non-ferrous Metals Co. Ltd said on Thursday.
Minmetals last week paid $1.4 billion for Australian mining assets it hopes to use as a launch pad to becoming a global supplier.
"We think the market will be flat in the next one to two years," Wang told reporters, dampening speculation that China was already leading a global recovery in the sector.
Minmetals launched its newly-formed MMG Ltd Australian arm in Melbourne on Thursday after buying assets from OZ Minerals Ltd including Century mine, the world's second-largest zinc mine, and a copper and gold business in Laos.
After operating at a loss, Century had turned cash positive thanks to a bump up in zinc prices, MMG's chief executive Andrew Michelmore said.
"In the last quarter, cash costs have been running around US$0.50 a pound," Michelmore said.
This compares with current equivalent selling prices of around A$0.71 a pound ($1,555 tonne) on the London Metal Exchange MZN3. The LME price in January was around $0.58 a pound ($1,280 a tonne).
Costs at the mine had ballooned as high as $0.69 a pound last year due to temporarily inflated mining expenditure tied to pre-stripping work, meaning it needed to move more earth to access ore.
Michelmore also said he saw a need to develop the company's nearby Dugald River zinc deposit, possibly in the next two-to three years to meet anticipated fresh demand from customers, mainly steel makers using the metal in galvanising.
Dugald has long been tipped as a replacement for the Century mine, which is scheduled to run dry in 2015.
Increasing metals prices -- copper is up 54 percent since January and nickel MNI3 is up 26 percent -- has led to some predicting demand, particularly from China, was rebounding.
But senior executives, including ones from industry majors BHP Billiton Ltd/Plc and Rio Tinto Ltd/Plc, warn the price surges were probably linked to stockpiling of metals in China rather than higher consumption.
Source: Reuters
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