|26 April, 2020

UAE-based Ridge Global Energy, Chinese firm sign five-year copper supply deal

Transaction expected to generate $2bln in revenues over five years for Ridge Solutions

Image used for illustrative purpose. A worker operates crane at copper wire unit at Pakistan Cables in Karachi, Pakistan March 22, 2017.

Image used for illustrative purpose. A worker operates crane at copper wire unit at Pakistan Cables in Karachi, Pakistan March 22, 2017.

REUTERS/Akhtar Soomro

United Arab Emirates-based RS Global Energy, fully-owned by Angola-based Ridge Solutions Group, announced on Sunday that it has signed a five-year copper cathode supply deal with China’s Xinjiang Wal Optoelectronic Technology.

Ridge Solutions Group said in a press statement that it would supply 525,000 metric tonnes (MT) of Copper Cathode Grade A (non-London Metal Exchange (LME) registered) to the Chinese firm.

Jose Ferreira Ramos, Chairman and Executive President of Ridge Solutions Group said the deal is a major milestone for the group in the challenging circumstances.

“Our business strategy would integrate the strength of this major transaction to secure vertical integration and develop our own pool of world-class downstream and upstream portfolio in the mining industry to ensure sustainable value generation over the long run,” he said.

The deal is expected to generate total revenues, based on LME price, in excess of $2 billion over the five-year period, the statement said.

Ajaz Ahmed, EVP, Ridge Solutions Group said 525,000 MT deal represents the contractual volume commitment from the buyer side.

Procurement volume would be 45,000 metric tonnes in the first year, followed by 120,000 metric tonnes every year for the next four years, according to a company datasheet.

Ahmed explained that in the first year, monthly procurement volume would be 2,500 MT for the first six months, followed by 5,000 MT for the remaining six months. The volume would increase to 10,000 MT per month starting from the first month of the second year and continue until the expiry of the contract at end of the 60th month.

The procurement and refining would be in the Zambian region with exports to China taking place through South African ports, the company statement said.

Ahmed said the revenue forecast of more than $2 billion over a five-year period is based on the current average pricing of LME for three months forward.

“[We believe] there will be a positive correlation of LME price to sales and cost of production, [and] also, as part of our business strategy, integrated vertical diversification is a key target for sustaining economic viability and growth.” The statement had noted that the transaction would also require procurement of large reserves of copper concentrate and refining capacity, inclusive of local and logistics partners, to ensure swift execution.

Ahmed also pointed out that non-LME registered copper cathode has a growing market in China where the metal is widely used in the country’s manufacturing and infrastructure sectors.

Last week, Reuters reported that copper prices had slipped on worries about recession, virus drug trials.

In November last year, Fast Markets MB, which tracks global metal prices, had reported that imports of EQ grade copper cathodes (Grade A copper cathodes that are not registered) by China had increased due to copper scrap import restrictions to reduce pollution generated at processing plants in China.

(Reporting by Anoop Menon; Editing by Mily Chakrabarty)

( anoop.menon@refinitiv.com )

#UAE #Angola #Copper #Trading #China #Zambia

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