Coronavirus uncertainty delays Japan copper asset sales

Japanese metals producers Mitsubishi Materials (MMC) and Kobe Steel (Kobelco) have agreed to delay their plan to transfer copper tube production assets to an investment fund, citing uncertainty caused by the coronavirus epidemic.

MMC last year decided to pull out of Kobelco Materials Copper Tube (KMCT), a copper tube joint venture set up with Kobelco, by selling all of its 45pc share to Japanese private investment fund Japan Industrial Partners. Kobelco also separately agreed to sell a 45pc share to the investment fund while retaining a 10pc share in KMCT. The transactions were originally targeted to be completed by yesterday.

MMC and Kobelco have accepted a request from CTJ, a special purpose company fully-owned indirectly by Japan Industrial Partners, to postpone the transactions tentatively by three months until 30 June. The two firms are planning to continue urging CTJ to complete the deals as swiftly and certainly as possible.

MMC has been accelerating consolidation of its copper and alloy businesses, targeting to optimise its portfolio and focus on growth areas, such as manufacturing of electric vehicles. MMC today fully merged with Mitsubishi Shindoh, previously its wholly-owned subsidiary that produces value-added rolled copper products, as part of the efforts to strengthen copper products operations.

MMC earlier projected its rolled copper products sales to fall by 8pc to 130,000t during the April 2019-March 2020 fiscal year compared with 2018-19.

Kobelco is also pushing a group consolidation to refocus on core areas, such as steel and metal materials, machinery and power generation, to strengthen its business profitability. The company has been forced to reduce crude steel output, its main revenue source, as a global economic slowdown and the coronavirus outbreak took a toll on manufacturing demand, particularly for steel and metals used in car output.

Kobelco previously forecast its copper sheet and tube sales to ease by 6pc from a year earlier to 136,000t in 2019-20.

By Rieko Suda