China Investment Corp stake in resource firm nearly triples in value
SHANGHAI - China Investment Corp (CIC), the country's sovereign wealth fund, saw its $1.5 billion investment in Canada's Teck Resources Limited almost triple in asset value in a year, a top official from Teck said.
CIC bought 17.2 percent of Teck Resources, Canada's largest base metal maker, for $1.5 billion in July 2009 via a private placement as a long-term passive financial investor.
"We understand that it's one of CIC's largest holdings and one of the most successful investments. The original $1.5 billion investment is now worth more than $4.3 billion," Donald R. Lindsay, chief executive officer of Teck Resources, said on Friday in Shanghai.
Lindsay said CIC's shareholding in Teck had enabled the latter to form an important relationship with China, the largest consumer of Teck's products.
"CIC is very well positioned to assist us in growing our business," Lindsay said.
Teck has started selling steelmaking coal to five large steel mills in China since CIC made its investment in the company.
Lindsay said that as a long-term financial investor, CIC is "comfortable" with its current holding in Teck and does not intend to increase its stake.
The $300-billion sovereign fund reported an 81 percent rise in net profit in 2009 to $4.7 billion, with an 11.7 percent return on its global investments.
Teck, the world's second-largest exporter of metallurgical coal, has bet on China's surging demand for commodities including copper, coal and zinc, on the back of the country's massive infrastructure development and its growing appetite for automobiles and appliances.
"We want to be one of the earliest (overseas) companies to list in China's stock markets," Lindsay said, but added that the date of listing would be subject to regulatory approval.
China, the world's largest energy consumer, currently accounts for 15 percent of Teck sales of coking coal, rising from zero two years ago.
The near-term outlook for seaborne coking coal is positive and has largely been driven by developments in China, the company said.
About half of the firm's lead is currently exported to China.
As for its copper business, Teck said that Jiangxi Copper Co, China's biggest integrated copper producer, is expected to become one of Teck's biggest consumers by importing 60,000 tons of copper ore concentrates from Teck's newly established copper mine in Chile.
In addition, Shenzhen Zhongjin Lingnan Nonfemet Co, China's fourth-largest zinc smelter, is teaming up with Teck by providing funding for the latter's lead and zinc project in Ireland, according to Doug H. Horswill, Teck's senior vice-president.