China Minmetals Corporation appears to be edging closer to gaining control of Hunan Nonferrous Metals Holding Group (HNG) after the metals trader said it was increasing its stake in the Hong Kong-listed firm.

Minmetals plans to increase its holdings to 51 percent from 40 percent, sources familiar with the matter said yesterday.

The two companies are expected to sign a formal agreement in this regard on Monday. No details were available on how Minmetals was going to fund the stake purchase.

Minmetals has had a rough ride in its plan to acquire HNG. It acquired a 40 percent stake in HNG in September 2008 and since then had been looking to increase its holdings in the company.

But He Renchun, chairman of HNG, said in September this year that Minmetals was only a business partner and there was no immediate plan by Minmetals to increase its stake.

What really queered the pitch for HNG were the huge losses it racked up this year. The non-ferrous metals miner reported a loss of 212 million yuan in the first half of this year against a net profit of 279 million yuan in the same period of 2008.

"We expect Minmetals to infuse more cash into HNG, add mining properties, and expand production," said Wang Xiaodan, an analyst with China Merchants Securities.

Shares of HNG were suspended from trading yesterday in Hong Kong until Dec 28.

Zhuzhou Smelter Group Co Ltd and China Tungsten and Hightech Materials Co, managed by HNG, also confirmed yesterday that their shares were suspended from trading. The two firms said HNG was considering important deals that could lead to a potential change in ownership.

Zhuzhou Smelter's share price rose nearly 45 percent since September, and closed at 17.7 yuan per share on Wednesday.

China Tungsten closed at 9.8 yuan per share, 35 percent higher from September levels. If the Minmetals deal goes through, it would save the company from a potential delisting, said sources.

Minmetals' revenue grew 15.9 percent to 180 billion yuan last year. Iron ore and nonferrous metals account for nearly 80 percent of its business. The company also owns vast resource deposits.

In June, Minmetals bought Australian zinc and lead mining company OZ Minerals for $1.4 billion to boost its resources.

For Minmetals, the HNG buy would further boost its nonferrous resources, said sources.

Minmetals has been actively consolidating its mining assets this year. In October, it acquired Changsha Research Institute of Mining & Metallurgy and Luzhong Metallurgy & Mining Group. The two State-owned enterprises are now fully-owned subsidiaries of Minmetals.

Many State-owned mining companies were reorganized or merged into bigger ones recently under the guidance of the State-owned Assets Supervision and Administration Commission. In September, China Nonferrous Metal Mining Group Co Ltd acquired Shandong Albetter Albronze Co Ltd.