Chinalco may Cut Down its Copper Unit IPO Size

Aluminum Corp. of China may cut the size of a Hong Kong initial public offering of its Peruvian copper mining unit by more than half to about $400 million, two people with knowledge of the matter said.

Chinalco Mining Corp., a unit of China’s biggest aluminum producer, must submit new financial information to Hong Kong’s stock exchange and may start the IPO in the next three months, said the people, who asked not to be identified because the information is private.

The company’s struggle to complete the sale underscores weak demand for new stock in Hong Kong, which is on track for its worst IPO fundraising year since 2003. Chinalco Mining had previously planned to raise $800 million to $1 billion, the people said.

“The overall sentiment for resources stocks is weak,” Helen Lau, a commodities analyst at UOB Kay-Hian Ltd., said by phone from Hong Kong. “There is also a bit of concern of copper oversupply. Demand is slowing while more production is coming out of South America and Mongolia.”

Two calls to the office of Yuan Li, Beijing-based spokesman for Aluminum Corp. of China, known as Chinalco, went unanswered today. BNP Paribas SA, China International Capital Corp. and Morgan Stanley are managing the sale, the people said.

Copper consumption in China will drop about 8.5 percent to 5.6 million metric tons this year, the first contraction since 2008, according to Simon Hunt Strategic Services, a Weybridge, Surrey-bsed consultancy that compiles analysis for users and fabricators.

Copper supply may expand at a record pace through 2020, adding almost 9.5 million tons of the metal to the market, according to Bloomberg Industries. Three-month copper futures on the London Metal Exchange, which tumbled 21 percent last year as Europe’s debt crisis hurt global growth, traded at $8,155.75 a metric ton today.

Companies have raised $2.9 billion through IPOs in Hong Kong in 2012, an 80 percent decline from the same period last year, according to data compiled by Bloomberg. The figures exclude first-time share sales by companies already listed in Shanghai or Shenzhen.

Chinalco Mining received approval from the city’s bourse in May for the offering, based on financial data that covered the period through March 31, the people said. Under Hong Kong rules, companies’ latest financial information must be less than six months old when they start an IPO.