Thanks to the world-wide boom in commodity prices, mining and metals majors are scouting for hot investments, be it in Africa, India, Indonesia or China. RAK Minerals and Metals Investment (RMMI), established under the Ras Al Khaimah Investment Authority (RAKIA), is no exception.

Earlier this year RMMI made two prized acquisitions one at Congo where it has acquired a copper mine and the other a mining firm in Armenia. Not to speak of the much wider understanding RAKIA has established with South Sumatra province of Indonesia where RAKIA entered into an MoU that covers the entire mining-to-export chain of coal industry that transcends beyond the industry verticals and looks at developing and supporting other possible industries.

The Province of South Sumatra, which holds the largest resources of coal in Indonesia, aims to capitalise its strategic location and get the full benefits from its natural resources and agriculture-based economy to induce social and economic growth in the region by attracting investments in the minerals/ore processing industry, agro-businesses, bio-technology industries and oil and gas refineries.

In April this year, RMMI has acquired 7.24 per cent stake in Thailand's Padaeng Industry Pubic Company Ltd, the only producer of high quality zinc in South East Asia which has enabled Madhu Koneru, managing director of RMMI and executive director of Trimex International, to earn a place in the Padaeng director board. The unique strength of RMMI in a very crowded and competitive global mining and metals industry is the unique forging of ties between RAK Ceramics and Trimex, a multi-national minerals conglomerate providing turnkey industrial and mineral solutions. RAK Ceramics and Trimex hold 50 per cent share each in the venture that was floated in 2006.

“RAK Ceramics and Trimex have a long history, both in the Gulf and in the mineral industry. The companies share several managerial and operational synergies that have developed into a history of successful collaboration, which has in turn naturally progressed into a joint venture,” according to Madhu Koneru, managing director of RMMI.

Madhu Koneru , a graduate in commerce from the Delhi University, started his career with the Trimex Group, his own family concern in 1992 as a trainee. Three years later he was appointed general manager and became the company's executive director in 1996. During this time, he has also been a member of the boards of directors of Al Ghanem Industrial Company, Kuwait, and TJ Shipping and Logistics.

In his role as managing director of RMMI on behalf of Trimex, Madhu is focused on building RMMI into a world-leading mining solutions provider in the metals and minerals industry. In an interview with Sreekumar Raghavan, Managing Editor of Commodity Market, Madhu Koneru explains the progress made by the company and its future roadmap.

Globally steel companies, power utilities metal industries are scouting for ore, coal or downstream minerals as part of backward integration. In this scenario, what role does RMMI have to play as an emerging investor in mining and metals? Just as steel companies have gone scouting for iron ore and coal as a backward integration strategy, RMMI has been formed by RAK Investment Authority and TRIMEX International to feed the demand created by the region due to its target of becoming a major industrial hub.

TRIMEX International is the managing technical partner for RMMI. In addition, RMMI would also be exporting the metals and minerals to the RAK region to ensure enough resources to develop the country's infrastructure. RMMI targets mid-sized companies and independent mine owners one of the fastest growing segments in the industry today. Our investments are long-term we develop the mines and operate them.

This distinguishes us from asset managers or investment funds. The real estate boom in the region has created demand for cement, glass and ceramics. As an emerging tourist country, the UAE also needs to scale up infrastructure. RMMI was basically floated to invest in commodities all over the world be it in Africa, Indonesia, Eastern Europe or wherever there is opportunity in mining and minerals.

Could you give us some details on your acquisitions made in Congo and what progress has been achieved so far?
The acquisition in Congo was made at the beginning of the year. Ras Al Khaimah Minerals & Metals Congo (RMMC), a special purpose vehicle formed to operate in Congo, has invested $50 million in acquiring stakes in two companies holding vast copper mines. The company has acquired 50 per cent stake in Katanga Minerals Processing (KMP) and 50 per cent stake in Premiere Miniere Du Katanga (PMK).

RMMI is setting up a world class copper & cobalt smelter plant in the Katanga region of Congo at an initial investment of $200 million. At this stage, construction is in progress with an aero-magnetic survey in progress, and further mining has begun. Currently, we are looking for possible greenfield projects and assessing their feasibility.

What about the acquisition of mining firm in Armenia? What are the major achievements from that acquisition?
In Armenia, our 100% acquisition of Armenian mining firm TSCC Armenia covers three mining complexes spread across two regions, North and South Armenia. Test drilling has begun in semi-brownfield complexes that are in close proximity to existing plants. Initial exploration has concluded that the base metal profile is largely copper, with other poly-metals associated with copper deposits, including lead, zinc, and molybdenum.

Within the complexes, some deposits have also been identified as auriferous. In the next two years, RMMI plans to build a concentrate plant in South Armenia's Larneshan region to process both copper and polymetallic ores into concentrates. RMMI's ownership of the natural resources, as well as the capability to convert ores into concentrates, also opens up the options for the setting up of smelters in the future.

What is the target for acquisitions this year?
We have plans to invest $1 billion in resource rich countries in East Asia, Africa and Eastern Europe in 2008. We have already invested $500 million in acquisitions. We are focusing on coal mining in Indonesia, in Thailand we have invested in a zinc smeltering plant called Padaeng Industry, a public listed company.

How far has the involvement of Ras Al Khaimah Investment Authority helped in your growth and acquisitions?
The advantage is that as we did in South Sumatra, Indonesia, we can go in as a government-to-government consortium. While we have subsidiaries that manage specific metals, such as Ceramin, which manages ceramic mining and RAK Coal & Energy, which looks after coal mining, RAK Ports which is part of RAK Investment Authority will manage the construction of ports wherever needed. RMMI is the first Middle Eastern mining company with a global reach. RMMI has been set up under the patronage of HH Sheikh Saud Bin Saqr Al Qasimi, Crown Prince and Deputy Ruler of Ras Al Khaimah.

Mining and metals industry is environment and socially sensitive? How far have environmental regulations affected RMMI?
RMMI respects all international and national laws wherever it is operating be it in Indonesia or Congo.

How do you view the current boom in commodity prices?
RMMI believes that the current commodity prices have spiraled due to supply-demand mismatch not necessarily due to speculation. But the prices are still below the 1940 levels when adjusted for inflation.

What is RMMI's core strength and asset?
Our core strength is our strategy of moving fast in the business and investing at an early stage. In three months of operation, we are managing 23 licences in Indonesia, Congo, Armenia, and have invested in Australia recently. The secret of our success is speed. If an investment opportunity arises, we are on site within 24 hours. We break ground in the time that our competitors take to consider an investment. As an experienced management team, we have developed an expertise in fast decision-making.

How far will this demand-supply gap in commodities continue?
I feel that the present demand-supply gap in metals, minerals, oil how long it will continue is hard to predict, but in the long term should stabilise. In the coming years, India, China and Middle East will play a major role in driving up consumption demand in commodities.

Do you have any investment plans for India?
India is not on the investment horizon of RMMI as of now. In the next 10 years there is going to be heavy investments in infrastructure in India. RMMI might set up a copper plant in India. Otherwise, the investment will be more in setting up smelters rather than in mining as already huge players are into mining in India.

This interview published in COMMODITY MARKET, India’s No 1 news magazine on commodities.