By James Regan
SYDNEY, Oct 2 (Reuters) - Australian copper miners sitting
on undeveloped deposits are catching the eyes of investors
looking beyond the downward trajectory in metals markets, with
private investment giant KKR & Co LP KKR.N the latest to take
a position.
"Private investors are assessing the longer term value while
the market sits at the bottom," said Fat Prophets mining analyst
David Lennox
Copper prices have deteriorated in response to declining
economic growth in China, the world's top consumer.
London Metal Exchange copper CMCU3 ended the third quarter
down 10.5 percent, the weakest quarterly performance in more
than two years.
Shares in Australian copper companies have declined in step,
despite copper in Australian dollars remaining relatively flat
at around A$3.30 a pound
"It's a bit skewed, suggesting the company's are being
undervalued by the market," said Lennox.
Researchers at Capital Economics expect Australia to
outperform other commodities-heavy countries such as Canada,
Brazil and Norway.
"Australia's labour market will probably remain stronger
than those elsewhere, its fiscal situation is not as bad
and its services sector is well placed to take advantage of the
weakening in the Australian dollar," it said.
KKR acquired a 10 percent stake in Oz Minerals on Thursday
at an 8.7 percent premium to the last close, its first
investment in Australian mining.
Oz Minerals mines about 120,000 tonnes of copper a year, but
could go much higher if a second deposit, named Carapateena, is
constructed.
"We thought it was a good time to accumulate exposure to Oz
Minerals' shares given the environment," KKR said in a
statement.
That deal follows one last month where private investors,
ERM and Lighthouse Minerals, partnered to buy a mothballed
copper mine owned by India's Hindalco HALC.NS in eastern
Australia, with an eye to restart production at a higher rate.
On a larger scale, Chinese state-owned investor Guangdong
Rising Assets Management GDRAM.UL (GRAM) in May was one of the
first to act, completing a takeover of PanAust Ltd after PanAust
finalised a $125 million deal to buy a copper project in Papua
New Guinea.
Analysts expect GRAM to spend nearly $2 billion developing
the project.
"The key message is that valuations are starting to look
interesting," said Peter O'Connor, a mining analyst for Shaw
Stockbroking.
"Companies that offer specific opportunities, be it through
valuations, optionality or management activism are being
explored. Where shareholders are sometimes slow to see the
growth path, somebody from afar can better pick up on that,"
O'Connor said.
(Editing by Ed Davies)