Jiangxi Copper sees domestic prices rising in 2011

BEIJING, March 5 (Reuters) - China's top copper producer Jiangxi Copper (0358.HK: Quote) (600362.SS: Quote) expects domestic copper prices to rise this year, mainly due to a supply squeeze, its chairman said on Saturday.

"Domestic supply of copper will be a bit tight this year, and prices are expected to rise, especially in the first half," Chairman Li Yihuang told Reuters on the sidelines of the National People's Congress, China's parliament.

Copper prices have risen rapidly over the last two years, in part because of growing consumption in China, the world's second-biggest economy, which needs the metal for its buoyant construction industry.

Three-month copper on the London Metal Exchange CMCU3 has now reached around $9,900 a tonne, while Shanghai's most active copper contract SCFcv1 closed on Friday at 74,720 yuan ($11,373) per tonne.

Li said he expected domestic consumption to rise by around 7 percent this year. He said that he had not heard of any plans to sell copper from government reserves.

Li added that the company was working with officials in Afghanistan on finding a way to move forward with the Aynak copper project southwest of Kabul, which has been delayed due to the discovery of ancient Buddhist relics at the mine, some more than 15 centuries old. [ID:nSGE6B401B]

The project is 75 percent owned by Metallurgical Corp of China Ltd (MCC) (1618.HK: Quote) and 25 percent owned by Jiangxi Copper.

"There is a special team doing research on how to proceed with the project, and the results are likely to come out in March," Li said.

(Source: http://af.reuters.com/article/metalsNews/idAFTOE72401120110305)