China puts brakes on producers of copper

BEIJING - China, producer of 13 per cent of the world's refined copper, plans to slow the expansion of smaller copper smelters as part of wider efforts to cool its economy.

It is the latest in a series of measures taken by the Government to curb lending to industries such as real estate and steel and to restrict property loans, in an attempt to rein in the world's fastest-growing major economy. It recently allowed its currency to strengthen, a move that may help Premier Wen Jiabao to restrain expansion and keep inflation in check.

"What worries us is that smaller smelters are adding capacity too fast," said Jia Yinsong, an official from the top economic planning agency. The Government will "come up with policies to guide the industry and slow the rate of expansion", he told a conference in Beijing. The Chinese economy grew by 9.5 per cent in the first half of the year.

China has plans to add as many as 18 copper smelters with a total output capacity of 2.49 million metric tonnes, said Jia. He gave no figure for current capacity. Output of copper, used for wires and cables, may reach 2.45 million tonnes this year.

The Government wants to avoid what happened to the aluminium industry, where expansion was too quick, causing a glut, said Jia, director of the Economic Operation Bureau at the National Development and Reform Commission.

Three copper smelters are being built, seven are under study and eight are planned by local governments, Jia said, without giving a timeframe.

At the same time, the Government supports investment in big smelters, including Jiangxi Copper Co as it needs more metal for wires and cables to supply the rapidly expanding power industry and reduce electricity shortages.

Jiangxi Copper, the biggest producer, plans to boost output to 700,000 tonnes in 2007, from 420,000 tonnes last year. Yunnan Copper, the third largest, aims to more than double capacity to 500,000 tonnes by 2010, from 223,396 tonnes last year.

China, the world's biggest consumer of the metal, has to import copper concentrate and refined copper to meet its needs.

China's demand for copper has pushed prices of the metal to records in London and Shanghai.