Friday, February 22, 2008
LG International Corp., the trading arm of South Korea’s fourth-biggest industrial group, and several other companies are in talks that may lead to an investment in the Rapu Rapu copper project.
“We hope to get a firm offer from some of the parties by next week,” said Ken Fung, a manager at Ferrier Hodgson, the administrators appointed last year by the mine’s main backers, Australia’s Lafayette Mining Ltd., after failing to pay off debt. “Half a dozen” companies were in talks, Fung said.
South Korea, which imports 97 percent of its energy and minerals needs, is increasing investments in overseas resource projects to secure supplies as prices gain. Copper, used in pipes and wires, has advanced 23 percent this year.
LG International, which already owns 15.6 percent of Lafayette Philippines Inc., the local unit that runs the mine, may raise its stake in the project, spokesman Kim Dong Wook said by phone yesterday.
Lafayette Mining’s shares have been suspended from trade on the Australian Stock Exchange since Nov. 29, when they ended at A$.015. LG International stock gained 0.6 percent to 17,700 won at 1:15 p.m. in Seoul yesterday.
Fresh investment in Rapu Rapu would be a boost for the Philippines’ drive to develop the mining industry. Lafayette Mining was the first overseas company to run a mine in the metals-rich Southeast Asian nation since investment rules were relaxed in 2004.
The five other parties that had expressed potential interest in the project included “industry specialists and financiers,” Ferrier Hodgson’s Fung said from Hong Kong, without identifying them.
“Any new investor would have to put in additional equity, which can be used as operating capital,” Bayani Agabin, a spokesman for Lafayette Philippines, said yesterday by phone from Manila. Agabin also didn’t identify the companies that were doing due diligence on the project.
Lafayette Mining, based in Melbourne, said Dec. 18 it was appointing Ferrier Hodgson to arrange a sale or restructuring of the mine. Lafayette Mining owns 76 percent of Lafayette Philippines, which runs the mine and a processing plant.
LG International is part of a Korean group that invested in Rapu Rapu. Korea Resources Corp., a state-run resources developer, has a 10.4 percent stake. Korea Resources spokesman Kang Chon Gu had no comment on the matter. Bloomberg