The share trading opportunity of Kasakhmys

In these days of extraordinary volatility and of exceptional gains on the world's financial markets, it is a relief to look towards an area which for many years to come will continue to advance, even if it suffers temporary setbacks. This particular area is that of the emerging markets, and in particular, China, which economists estimate will, by the middle of this century, be by far the biggest country in the world in terms of its gross national product (GNP). To feed its irrepressible growth, China is looking all over the world for natural resources.

BHP Billiton has warned the Australian government not to think any more nonsense about its efforts to take over Rio Tinto. It believes that if this does not happen, China will take over the ownership of metal extraction in Australia. Another area in which China is interested - and not only China - is Kazakhstan. Kazakhstan received excellent analysis in a Financial Times supplement of July 2. This is obligatory reading for serious investors. The FT wrote: "Kazakhstan is one of the best endowed countries in the world for natural resources as well as abundant reserves of oil and gas; the country is a major producer of uranium, copper, chromium, lead, zinc, manganese, coal, iron ore and gold, and is said to host 95 per cent, of the periodic table of elements."

This mineral wealth of Kazakhstan has produced two mining groups which are battling to come out on top. They are London-listed companies, and they have long been circling round each other. The ENRC and Kasakhmys rapidly increased their share price as soon as the mining company Xstrata made its $9.8 billion takeover bid for Lonmin - that is South African Mines producing platinum.

It is impossible to track the progress of Kasakhmys without knowledge of ENRC. This company produces ferro-alloys, aluminium, iron ore and power. The talk in London is whether Kasakhmys and ENRC will coalesce to form a national champion for Kazakhstan with enough clout to compete with the likes of BHP Billiton. Every time there is talk of a full bid for ENRC by Kasakhmys, there are significant share price movements which provide trading opportunities for the agile investor. Kasakhmys' share price has climbed 18 per cent since January.

Some months back I wrote about the Siberian gold and metal mining companies of the Hambros family. In these days of massive financial upheaval in the metal markets, Hambros, father and son, appear frequently on Bloomberg, where they are given a chance to display their family's power of prescience in the world of investment in metals. The central message of Jay Hambros (the son) was that the world metal mining sector was hugely under-valued. This being the case, there was only one solution to this problem, and this was for metal mining companies to merge, increase efficiency, lower costs, and hence increase output. The mining events made public last Wednesday were a complete vindication of the Jay Hambros forecasts of some months ago.

The whole story of the various attempts of Kasakhyms to take over ENRC, and of the audacious plans of Usmanov, the Russian Olijarch, to take over Kasakhyms, are also part of the hopes of Xstara to win control through the $9.8 billion bid for South African Platinum. If more new mines cannot be swiftly developed, the existing ones must be made more efficient through mergers and acquisitions.

Investors should care to find what the share targets of analysts are as regards Kasakhmys, and what its present price share movements are. They should provide ample trading opportunities. Kasakhmys share price movements have been for the last year or so, predictable, but by no means easily. It has been a joy for me to hold a modest portion of Kasakhmys shares.

This article is based on practical experience, but it is merely descriptive and by no means advisory. The taste of the pudding is in the eating. Let us all enjoy our investment opportunities.

Mr Azzopardi Vella, economic consultant with DBR Investments Ltd, has promoted the Malta Development Fund and advised S & P.

johnazzopardivella@hotmail.com