China Molybdenum Raises Price Range in Share Sale (Update1)
By Bei Hu and Darren Boey
April 12 (Bloomberg) -- China Molybdenum Co., the nation\'s second-biggest producer of the material used to toughen steel, increased the price range in its Hong Kong initial public offering, according to a sale document.
The company is offering 1.08 billion shares at HK$5 to HK$6.8, raising the upper end of the range from HK$6.4, the e- mail showed. At the top end, the sale would raise about HK$7.3 billion ($934 million).
The share sale will help boost production of the metal as demand from Chinese stainless steelmakers drives record prices. Molybdenum oxide prices have climbed 14 percent this year to $29 a pound, according to research company Metal Bulletin. World stainless steel production jumped 17 percent last year, the International Stainless Steel Forum said on its Web site.
``Molybdenum prices will remain strong on demand from the steel industry as well as environmental regulations, which will limit supply,\'\' said Duan Yuxian, China Molybdenum chairman, told reporters today by videoconference. ``Last year China consumed 20 percent more molybdenum from 2005.\'\'
The company is selling a 22.7 percent stake. China Life Insurance Co., CITIC Pacific Ltd., Government of Singapore Investment Corp. and other investors have agreed to buy shares.
Morgan Stanley, UBS
Morgan Stanley and UBS AG are arranging the share sale.
China Molybdenum, which includes Baosteel Group Corp. and Posco as major customers, plans to use the proceeds for acquisitions in the gold and other mining projects as well as for its expansion plans, Duan said.
The IPO comes at a time when investors are showing increased interest in molybdenum. Sprott Asset Management Inc., a money manager founded by Eric Sprott, said April 5 it will raise C$200 million ($174 million) by selling units in Sprott Molybdenum Participation Corp., twice as much as expected.
China\'s production capacity of stainless steel will expand 56 percent to 8.64 million metric tons this year over last, spurring demand for molybdenum, used to harden steel, Roskill Information Services, a London-based provider of data on the global metals and minerals markets, estimated.
Worldwide steel production gains will support molybdenum prices over the next few years, said Daniel Brebner, global commodity analyst at UBS AG in a Jan. 31 report.
China has the world\'s largest molybdenum reserves. It was the third-largest producer globally with a 20 percent market share in 2005, behind the U.S. and Chile, Roskill said on its Web site.
To contact the reporters on this story: Bei Hu in Hong Kong at bhu5@bloomberg.net
Last Updated: April 12, 2007 06:30 EDT
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China Molybdenum to launch IPO in HK next month
China\'s 3 largest molybdenum miner China Molybdenum Co., Ltd. plans to launch its initial public offering (IPO) on April 26 in Hong Kong Stock Exchange, market source said.
It plans to issue 1.083 billion shares in HK for 300-700 million US dollars (about 3.9-5.46 billion HK dollars). The newly-issued shares account for 22.73 percent of the expanded capitalization. Besides, it will issue an additional 10 million shares to deposit in social security fund.
China Molybdenum will carry out a formal roadshow as of April 4 and public offering is primarily set to start on April 16.
The underwriting syndicate predicts that China Molybdenum will earn at least 2.2 billion yuan in 2007, soaring 45 percent from the revenue of 1.515 billion yuan in 2006. The P/E ratio is to range between 15-16 times. The money raised may be used for production expansion, developing tungsten production and acquisitions.
China International Capital Corp (CICC), one of the underwriters, said in a research report that China Molybdenum will maintain strong growth momentum in 2007 and 2008 with its net profit surging 53.5 percent and 35 percent year on year respectively to 2.33 billion yuan and 3.15 billion yuan. The revenue is expected to leap by 45.1 percent to a record 5.55 billion yuan in 2007 and jump a further 21.6 percent year on year in 2008 to 6.75 billion yuan.
CICC forecast that the main driving forces for the company may come from the operation of a tungsten recycling plant in 2008, rising price of tungsten due to large demand, and the continuous growth of tungsten output.
Market source said that there are a number of magnates having shown interest in subscribing shares of the company. Even Baosteel, the biggest client of the company, is willing to buy the share. It is learned that China Molybdenum plans to introduce no more than five strategic investors this time.
China Molybdenum has the world\'s biggest molybdenum mine with a proved reserve of 2.06 million tons. It produces a daily 20,000 tons of nonferrous metals including molybdenum and tungsten.
Besides China Molybdenum, the mainland\'s biggest molybdenum producer Jinduicheng Molybdenum Group Co., Ltd. is also brewing its IPO launch in Hong Kong to raise some 1 billion US dollars (about 7.8 billion HK dollars). Deutsche Bank, Merrill Lynch and NBS may be the sponsors of the offering.
www.chinamining.org/Companies/2007-03-29/1175146747d4…
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