The U.S. unit of China's oil major Sinopec Corp is procuring copper to send to its equipment suppliers in China, two sources familiar with the matter told Reuters, a rare move by a Chinese oil company.
Sinopec USA is seeking to buy around 300,000 tonnes of copper and copper concentrates per year to then sell on to its suppliers of copper rods and cables in mainland China, the sources said, speaking on condition of anonymity because the discussions were confidential.
The move would allow Sinopec to profit by selling copper to Chinese suppliers that struggle to clinch big international trade deals, one of the sources said, adding that many such companies in China face high prices and a limited supply of copper.
"For some there are three middlemen," between the miner and the supplier, he said.
Sinopec has pledged to raise spending on energy infrastructure after a bumper earnings season last year, betting on robust growth demand for liquefied natural gas (LNG).
Sinopec began to buy copper last year, the people said. It may look to expand into procurement of other metals as required.
In a statement, Sinopec confirmed that two of its representatives attended the conference for the first time to seek copper supplies for customers on an e-commerce platform. It added that the intent was only for such procurement and that no contracts had been signed.
Sinopec representatives were seeking meetings with a number of mining companies that have Latin American copper operations, including Brazil's Vale, three sources said.
Two of the sources said Sinopec was also reaching out to Canada's Teck, Arizona-based Southern Copper,, which is controlled by Grupo Mexico, as well as Chilean miners Codelco and Antofagasta.
Vale and Teck declined to comment while Southern Copper and Codelco did not respond to requests for comment. Antofagasta said it had no knowledge of the matter. China, the world's biggest copper user, imported 352,000 tonnes of unwrought copper and 1.45 million tonnes of copper concentrate in February.
Companies such as car makers that use commodities like aluminium, cobalt and copper in bulk often lock in supplies in long-term deals to protect against big swings in prices and secure raw materials amid occasional shortages. Sinopec last month pledged to raise spending by around 18 percent this year after posting its best annual earnings since 2013 on the back of a rally in oil prices.
The energy firm said some of the funds would go towards building more shale gas production capacity in southwest China and that it planned to more than double its LNG receiving capacity in the next six years.
