Candle maker plans to invest $100 m to explore gold, copper sources in world
BEIJING - Qingdao Kingking Group, the second-largest candle maker in the world, plans to invest $100 million to develop gold and copper mines across the world in the next three years, according to a top company executive.
"As part of an expansion plan, the company, together with a trading company from Anhui province, is looking at buying a gold mine in Mozambique," said Huang Bao'an, administrative vice-president of Kingking Group. The mine occupies more than 100 square kilometers.
"A lot of energy projects in Africa are in the hands of European companies," Huang said. "But because of the spreading European debt crisis, many European companies find themselves in difficulties and are looking at halting or withdrawing their investments. This has given Chinese businesses huge opportunities to invest abroad and develop natural resources.
"Kingking is one of them that is looking to take advantage of the opportunities."
The Mozambique gold mine was once owned by a Portuguese company, and Kingking's partner in Anhui province has obtained development rights from the Mozambique government.
The two companies agreed to exploit the mine together. Kingking is to provide the technology to be used in the venture and recently sent a team to examine the mine.
"It's a nice mine, and we still want to do research before we present an offer for a deal," Huang said.
'Beyond the mines in Mozambique, Kingking is looking at similar sources of gold and copper in South Africa and other parts of Africa," he said.
In January 2009, Kingking bought oil fields occupying 9 sq km from the State of Oklahoma in the United States, marking the first time a Chinese company has bought oil fields in that country.
"The move helped us expand upstream and get a stable supply of raw materials for making candle products," Huang said.
After the deal, the company purchased six oil fields occupying 290 sq km in the US states of Texas and Louisiana. The six fields contain reserves equal to 600 million barrels of crude oil and 15 billion cubic meters of natural gas.
"Our success (in brokering deals in the US) stems from the global financial crisis, which led to financial troubles for energy-investment companies and also forced the US government to loosen investment restrictions on energy deals," Huang said.
Chen Suobin, chairman of Kingking Group, was recently quoted by the China Business News as saying that the company plans to concentrate especially on the development of gold mines.
In November, the company announced a plan to buy 80 percent of the shares of Rushan Daye Gold Mine in Shandong province, which owns 16 gold mines.
In March, Kingking began working with a research institute from Baoding in Hebei province, to learn more about gold mines in the province.
Besides its overseas energy business, the company is committed to expanding its candle business, Huang said.
"We aim to achieve a steady double-digit growth rate for the candle business while the domestic business chain is expanding," he said.
The largest candle maker in China, Kingking has worked for many years with some of the largest chain retailers in the world, including Wal-Mart Stores Inc, Carrefour SA and Inter Ikea Systems BV. It sells the majority of its products overseas and more than 60 percent of its exports carry the Kingking brand.
About 80 percent of the company's exports go to the US and European Union. The rest go to markets in Asia.
The company began to sell its products in China a few years ago. The company has now set up a network of more than 100 stores across the country and domestic sales make up from 5 to 10 percent of its total sales.
In the next five years, Kingking will open 1,000 stores in China and they are expected to generate 2 billion yuan($317.7 million) worth of extra sales.