JIANGXI Copper Co. said yesterday it has set up a Cayman Islands-based fund that will buy mining projects as the copper producer sets its eyes on potential bargains as the commodities cycle bottoms.

    As China’s largest copper producer reported a 37.9 percent drop in net profit due to weak metals prices, it said it had allocated US$100 million through its subsidiaries to establish Valuestone Global Resources Fund I in the Cayman Islands with CCB International Asset Management Ltd., part of China Construction Bank Corp.

    By Aug. 4, the fund had US$150 million in initial funding and was now open to domestic and foreign institutional investors. The aim is to get US$300 million in total investment.

    Jiangxi Copper, which lists shares in Hong Kong and Shanghai, didn’t identify what projects it was targeting, but said the fund will capture opportunities arising from low metals prices.

    “The focus is not to secure supply, it is rather how to make a profit at the bottom of this industry cycle,” said analyst Helen Lau of Argonaut Securities in Hong Kong.

    “Eventually, Jiangxi Copper may participate in operating and investing... but they may ask the [private equity] fund to just flip it.”

    The fund may be able to cast its net wider than traditional private equity units, said Lau.

    Private equity funds have been on the hunt for deals for the past few years but have largely held back on purchases.

    However, Jiangxi Copper’s fund could have greater capacity to develop projects since it is a major producer as well as a stakeholder offering operational know-how and could pay for the offtake, said Lau.(SD-Agencies)