Asia Pacific is focus for RMMI growth

Middle East company RAK Minerals and Metals Investments (RMMI) and its parent company Ras Al Khaimah Investment Authority (RAKIA) are keenly viewing the Asia Pacific region as a growth path to investing in mining.

The companies have recognized that company growth is well placed with investments in coal, copper and infrastructure development projects.

RAK Minerals managing director Madhu Koneru made a presentation recently in Singapore announcing that RAK Minerals had in the past couple of years made a decision to go global and invest in mining after more than 50 years in the limestone and cement industries.

The company has three regions of focus to grow its global footprint: Eastern Europe, Africa and Asia-Pacific. It’s investments interests lay in energy, specifically coal, metals and building materials.

"We love copper and any other metals around copper, Madhu Koneru says.

"Being a Middle East company, people get scared that we want to partner with mid-tier companies, but we have realized that the only way we can grow is through partnerships.

"We invested in copper and cobalt in the Congo, we have a acquired a stake in a smelter in Thailand and a 6% stake in junior copper play - Hillgrove Resources in Australia.”

Furthermore, the linked Ras Al Khaimah Investment Authority (RAKIA) and RMMI have signed with the government of Indonesia's South Sumatra Province to invest more than $US1 billion in 2008.

The companies intend to invest in the development of strategic resources and infrastructure projects in Asia and Africa, including India. The MoU is expected to benefit India's coal, industrial minerals and metals sector. The deal includes plans to develop an integrated industrial and logistics infrastructure, including a rail transport corridor, and deep water sea port to handle bulk and container cargoes.

"The MoU with resource-rich Sumatra - where we plan to develop a suitable freight corridor and port infrastructure - will allow us to develop a cost-effective and efficient export route for thermal coal and other natural resources to India and other Asian and Middle Eastern markets,” Madhu Koneru says.

The MoU covers the entire mining-to-export chain of coal industry that transcends beyond the industry vertical and looks at developing and supporting other possible industries. The MoU also includes building of an industrial park for metals refining, smelting and metal based fabrication industries, bio technology parks, palm, rubber and other agro-base industries, captive power plants and supporting infrastructure.

"This is one of the most exciting turnkey projects that RAKIA is undertaking and we believe that it has the potential to become a catalyst for our future organic growth in Asia. We are getting extra ordinary support and encouragement from governmental authorities and leaders of Republic of Indonesia, including the citizens and regional administration of Banyu Asia regency and South Sumatra Province, which can help RAKIA and RMMI to implement this project within record time,” Madhu Koneru says.

"Our focus is on the metal and minerals industry. We have a long term perspective on commodity prices. Thë key is to focus on resources in the locations they are available. We have to invest in the people regionally. The availability of people is becoming an issue.”

With copper demand increasing exponentially - consumption in China is 1kg/capita and demand increasing and supply decreasing the cut-off grade for viable projects has dropped from 1.9% to 1.3% to meet the growing demand.

There has also been a shift from oil and gas to coal for power generation as it is the cheapest way to produce power.

Madhu Koneru says there is a certain minimum expansion and infrastructure that has been developed and if we keep increasing our prices our customers are going to go away and not develop their projects.

The Padang smelter acquisition in Thailand was a strategic move for RMMI as it forms a growth path into the surrounding countries.

"The Padang smelter is seen in the industry as one of the best run smelters for its operations and also for its corporate social responsibility and that is something we want to learn.

"When we move into projects that have polymetals around copper then we will have the Padang technology staff to work with this metallurgy.

"In our strategy to be a strategic partner in mining with mid tier companies we offer them the opportunity to grow in the non-mining side. Development of ports and infrastructure is part of our family. So if there is a mine owner who wants to develop a mine, but not into the logistics, we have the knowledge to build ports and railways, Madhu Koneru says.

Yolanda Torrisi - Managing Editor and Director of The ASIA Miner, the international online mining magazine and mining news service for mining Asia.

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