MCC Chief Defends Overseas Resource Strategy

Global Ambitions

Political issues in Afghanistan were not the only hurdles MCC had to overcome in recent years. Tribal problems and the illegal arrests of Chinese technicians hampered the early phase of the Ramu nickel laterite-cobalt mine in Papua New Guinea, which started in 2005. The region is also susceptible to earthquakes, typhoons and other natural disasters.

The production start-up date for Ramu has been repeatedly postponed. It was originally at the end of 2009, delayed to June 2010, and postponed again to the end of this year.

But after production begins, Shen said, the Papau New Guinea mine is expected to produce 30,000 tons of nickel and 5,000 tons of cobalt annually.

In addition, the group is a 20 percent stakeholder in Sino Iron, an iron ore magnetite project in Western Australia, and functions as the project's main contractor responsible for design, construction, installation, testing and inspection of infrastructure.

Sino Iron was originally scheduled to begin production in the first half 2009. The date was pushed back to this year, but it appears that will be impossible, forcing another postponement until next February or March.

"The main problem is funding because operating costs keep going up," Shen explained. "One component is labor cost, since Chinese workers are not allowed in Australia and local labor costs are very high.

Critics in the market have faulted MCC for working on projects involving several types of minerals and high risk levels, as well as long development and construction timeframes. But Shen says all of these issues are unavoidable for Chinese enterprises that acquire resources overseas.

In addition, MCC has come under fire for an expansionist strategy. "The feeling is that they will acquire any mine they come across without a clear understanding of what exactly they want to develop," said Lan Fang, an analyst with Southwest Securities.

Shen is quick to defend his company and its global acquisitions.

"High quality resources have already been taken by others, so at present, we can only go wherever there are still good resources," he said. "Which regions we invest in is not up to us to choose.

"As for risks, we can only avoid them to the best of our abilities," Shen said. "As long as it is a good resource, we will go for it."