China Minmetals Corporation, the country's State-owned metals trading giant, is this month expected to finalize a long-term cooper supply deal with Chile's Codelco, the world's largest copper producer.

According to a statement from Codelco, Minmetals will have a 15-year contract, buying 55,750 tons of copper cathodes a year. The deal will help stabilize copper supplies to China.

Under the terms of the deal, the two companies will form a joint venture to exploit existing copper reserves. It will be a 50-50 joint venture.

Minmetals will initially invest US$550 million and pay a monthly amount as shipments are carried out, Codelco said in the statement.

The total investment is expected to be US$2 billion.

The negotiations with Minmetals are going well, the Chilean company said.

"We are establishing a long-term relationship with China, the major copper consumer in the world, involving financing obligations linked to the copper price that will reinforce Codelco's position as the market and industry leader."

China Daily could not get a comment from Minmetals because of the New Year holiday.

Zhou Zhongshu, president of China Minmetals Corporation, called the deal a "win-win" deal when the proposal was first made in June. He said the alliance with Codelco would allow Minmetals to receive a stable supply of copper.

Financial contracts with the China Development Bank, the joint venture's underwriter, will be formalized this month.

The deal, which was scheduled to be completed last June, was delayed because certain details had not been settled.

Codelco said Minmetals also has the right to purchase a minority stake in the Gaby Project, another Codelco copper mine.

That project is scheduled to start production in 2008 with an annual output of 150,000 tons of copper cathode.

China is now the world's biggest copper importer with its copper consumption accounting for about 20 percent of the world's total.

In 2004, China imported 1.38 million tons of copper and 2.88 million tons of copper ore. There was a 6 percent increase in the amount of copper imports in the first 11 months of last year compared with the previous year.

China's increasing copper demand is a result of the explosive growth in the power generation and telecommunications sectors.

Chile is the world's biggest copper exporter, producing 37 percent of the world's total. Copper accounts for about 38 percent of the country's total exports, with 20 percent of the copper produced there being delivered to China.

In 2003, Chile's copper production climbed to 4.9 million tons from 2.22 million tons in 1994, an average annual increase of 9.2 percent.

(China Daily January 4, 2006)