China’s Hopu to invest in Russian mining project

With more than 26 million tons of copper, the Udokan project is the largest deposit of the metal in Russia and among the largest in the world. However, development is complicated by a lack of transport and power infrastructure and harsh climatic conditions.

A strategic cooperation agreement was signed by BMC and Hopu in the presence of Chinese President Xi Jinping and his Russian counterpart Vladimir Putin during the latter's visit to China. It

"At this stage, interaction of BMC and Hopu Investments regarding arrangement of project financing and attraction of equity and long-term debt financing is of vital importance," Valery Kazikaev, BMC's chairman, said in a statement.

The agreement allows Hopu to acquire a minority share in the project by the end of 2014. The private equity firm is expected to assist BMC in forming an investment consortium of Chinese financial institutions and industrial sector representatives.

In February 2014 several leading international engineering companies completed preparations for a feasibility study of the Udokan deposit. Geotechnical studies are under way to select the optimal location for mining facilities. It is estimated the project could create 4,000 jobs directly and a further 20,000 through related industries.

Hopu was set up in 2007 by Fang Fenglei and Richard Ong, now of RRJ Management, and they raised a debut fund of $2.5 billion. The firm made a string of high-profile investments but disbanded in late 2010 amid reports that the two principals could not get along.

Fang is now raising $2 billion for a second fund, which announced a first close of $1.1 billion earlier this year. Hopu is described as having strong relationships with sovereign wealth funds and institutional investors in Asia Pacific, the Americas, Europe and the Middle East. It is also said to have considerable state-owned enterprise backing in China.

Recent investments include the acquisition of a minority position in an agribusiness joint venture being set up by COFCO Corporation and Noble Group, and participation in a consortium that pumped $2.5 billion into Global Logistic Properties (GLP), a Singapore-listed warehouse operator with interests in China, Japan and Brazil.

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• Topics
• Industrials
• Greater China
• Expansion
• China
• Russia
• Hopu Investment Management
• Commodities
• Growth capital