China will launch its first composite index of nonferrous metals sometime this year to help companies avoid risks. The index will be calculated using data for output, sales, prices, imports and exports, reported by domestic nonferrous metal production and trading companies, said a source at the China Nonferrous Metals Industry Association. “Because price gaps among different nonferrous metals are huge, it is hard to reflect the overall picture of the industry in one index,” said Jia Mingxing, Secretary General of the Association. The exact method of calculation is still being discussed. Separately, the Shanghai Futures Exchange will accelerate the listing of silver this year. In March 2011, lead futures were listed on the exchange. The addition of silver would mean that all four major nonferrous metals would be listed: silver, copper, aluminum and zinc. The Association forecast that average domestic nonferrous metals prices would be lower this year than in 2011, especially in the first quarter and even in the first half. China’s electrolytic aluminum companies are facing a severe challenge as the National Development and Reform Commission (NDRC) raised electricity rates twice in 2011, pushing up production costs for these energy-intensive companies. Power costs accounted for about 20% of the total costs of overseas producers, but the proportion was 45% to 50% for domestic companies.

• Angang Steel Co has estimated a net loss of CNY2.15 billion for 2011, joining other Chinese mills in reporting dismal results. The company, based in Anshan, Liaoning province, attributed the huge loss to high-cost feedstocks and output loss from maintaining its blast furnaces, said a Hong Kong stock exchange filing. Angang reported a net profit of CNY2.05 billion in 2010. Maanshan Iron and Steel Co and Nanjing Iron and Steel Co said their 2011 net profits may fall more than 50%. Shanghai’s Baoshan Iron and Steel Co said last month that its unaudited 2011 net profit tumbled 43% to CNY7.3 billion.
• Mining company Xstrata and commodities dealer Glencore agreed to a USD90 billion merger that will create the world’s fourth largest natural resources company, with operations in 33 countries. The new company would be the world’s third-largest copper producer, fourth-largest nickel producer and the global leader in thermal coal, ferrochrome and integrated zinc production. Xstrata Chief Executive Mick Davis will become CEO of the merged company. He expects the merger to complete in the third quarter of this year. Glencore CEO Ivan Glasenberg will become Deputy CEO and President of the new company to be named Glencore Xstrata International.
• Baoshan Iron and Steel Co plans to raise product prices next month after keeping them basically flat for January and February, on expectation of a pickup in seasonal demand and in response to rising costs. It will raise hot-rolled coil and cold-rolled coil prices by CNY150 a ton for next month.
• Oversupply in China’s steel industry would continue this year, said Maanshan Iron and Steel General Manager Su Jiangang. China could not put in place economic stimulus measures similar to those it enacted in 2008, Su added. Maanshan needed to improve its cost efficiency and expand the non-steel businesses, and it was looking at making wheels for high-speed trains.
• Baosteel Group has mandated Bank of China (BOC) as lead manager and book-runner for a proposed yuan-denominated bond offering. The company sold CNY3.6 billion of yuan-denominated bonds in Hong Kong last November, the largest corporate issuance of a yuan bond in Hong Kong. The proceeds of the latest issue would fund expansion of its resources unit Baosteel Resources (International) which was set up a year ago.
• An explosion rocked a steel plant of Angang Steel Heavy Machinery Co on February 20 in Anshan, Liaoning province, killing at least 13 workers and leaving another 17 injured. The accident happened when a 10-meter-wide mold exploded at a steel-casting workshop when workers were about to finish casting a ring-shaped piece of steel. The temperature inside the mold was more than 1,000 degrees Celsius at the time.
• China plans to develop rare-earth-based new materials during the 2011-2015 period, according to a five-year plan for the new materials industry. It also set goals to lift the output capacity for rare earth permanent magnet materials by 20,000 tons a year and that of rare earth hydrogen-containing alloy powder by 15,000 tons a year. The plan also sets higher output goals for a range of other new materials that contain rare earth metals.

China’s Minmetals Resources (MMR) has succeeded in its CAD1.3 billion bid for Africa-focused copper miner Anvil. Minmetals, a unit of China’s biggest metals trader, wanted Anvil for its Kinsevere project in the Democratic Republic of Congo, which is expected to produce 60,000 tons of copper cathode a year. “Anvil is the first step in the expansion of MMR’s global footprint,” Andrew Michelmore, Minmetals’ Melbourne-based Chief Executive, said. Minmetals has been looking to expand beyond its holdings in Australia and Laos, and last year missed out on a USD6.6 billion bid for Canadian miner Equinox Minerals when it was trumped by Barrick Gold. Both Equinox and Anvil have mines in central Africa’s rich copper belt, where several other mines are being developed by firms like China’s Jinchuan Group, which recently took over South Africa’s Metorex. Michelmore said Minmetals would be interested in other assets in the African copper belt. “We bid for Equinox, now we’ve got Anvil, so we’re interested in that part of the world,” he said. The firm would continue looking for copper, zinc and nickel sulphide assets in Africa, North and South America, parts of Asia and Australia, he said. He added the company would target assets in varying stages from exploration projects to mines near completion. The biggest hurdle to the Anvil takeover was cleared when Minmetals secured an agreement with Congo’s state-owned mining body Gecamines confirming that Anvil’s title to the Kinsevere and Mutoshi copper and cobalt projects were valid and in good standing. Gecamines had almost scuppered the deal when it said the takeover would trigger a review of the projects’ leases. Minmetals acquired 90% of Anvil’s shares and would move to take over the remaining shares as allowed under Canadian and Australian rules. Anvil had been up for sale since last August, when its biggest shareholder, commodities trader Trafigura, said it wanted to sell its 39% stake. China accounts for nearly 40% of global copper consumption and demand is expected to rise 6% to 7% this year, the South China Morning Post reports.

Australia’s Fortescue Metals has shrugged off worries about a slowdown in Chinese demand for iron ore, vowing to stick with a USD8.4 billion mine expansion plan and forecasting steady prices for the material. Fortescue, which has only been producing ore since 2008, sells 95% of its output to Chinese steel mills, the world’s biggest buyers of iron ore, and plans to nearly treble production by mid-2013. BHP Billiton and Rio Tinto are also boosting production, leading analysts to forecast a medium-term glut of iron ore amid signs that China’s demand growth for the metal is easing. Spot iron ore prices fell 19% in 2011 as China clamped down on liquidity, denting steel demand for construction, and have been fairly steady this year at about USD140 a ton. Fortescue Chief Executive Nev Power said the firm was counting on China to remain a big buyer in coming years. “Long term, China’s growth is forecast to be stable around the 9% mark and we don’t see significant new supply to come into the market in the short term, and, therefore, expect the price to remain in that range,” he said. Indian iron ore exports to China were dropping off due to tariffs and growing demand at home, while domestic Chinese iron ore output was expected to fall in favor of higher iron-content imported ores, he said. Fortescue, Australia’s third-largest iron ore miner, reported a half-year net profit of USD801 million, more than double a year ago but below analysts’ expectations of about USD840 million. Power declined to comment on speculation that a potential predator may be building up a stake in the company after a mystery buyer snapped up at least 2.9% of Fortescue’s stock. Andrew Forrest, who founded Fortescue in 2003, is the largest shareholder, with nearly 32% of the firm. Hunan Valin, a Chinese state-owned steelmaker, is second-ranked, with 14.7%, the South China Morning Post reports.

• Guangxi surpassed neighboring Guangdong to be the country’s largest importer of coal in 2011. Local customs said ports in Guangxi recorded throughput of over 27 million tons in 2011, up 61.3% over the previous year and accounting for 15% of the total. Guangxi’s coal was mainly imported from Vietnam, Indonesia and Australia last year. The province’s imports from Vietnam jumped by 42.8% to 11.7 million tons, which customs officials attributed to the price advantage of Vietnam’s coal.
• Angola’s government hopes to expand its nearly USD1 billion a year diamond business in partnership with Chinese firms through Angola Diamond Trading (Sodiam), which is 99% owned by Endiama, a state-owned diamond miner. Angola is expected to produce 8.5 million carats worth USD1.15 billion this year. In 2010, Dubai accounted for the largest share of Angolan rough diamond exports by value at 40%, followed by Israel at 34%, and China at 11%.
• China has raised the resource tax on six minerals, including iron and tin ores, in a bid to conserve reserves, but analysts said the hikes won’t have a big or long-lasting impact on costs given already high mineral prices. The benchmark tax ranges from CNY2 to CNY30 per ton depending on ore grade. New rates became effective on February 1. The resource tax on top-grade tin ore was lifted to CNY20 per ton, a 20-fold jump and the biggest increase among the six minerals affected. China also raised the tax on molybdenum, magnesium, talc and borax ores.