Xinhua Far East Changes Jiangxi Copper's Ratings Outlook to Negative, Triggered by Possible Downward Surprises

Xinhua Far East Changes Jiangxi Copper's Ratings Outlook to Negative, Triggered by Possible Downward Surprises

April 30, 2006

    HONG KONG, April 30 /Xinhua-PRNewswire/ -- Xinhua Far
East China Ratings today commented that the likelihood of
downward surprises on the issuer rating for Jiangxi Copper
Co., Ltd. ("JXCC" or "the Company", SH
600362, HK 358) was increasing and changed the Company's
rating outlook to negative from stable. Its issuer credit
rating remains BB+.

    Xinhua Far East reiterated that its rationale for
maintaining a non-investment grade rating for JXCC,
initiated in 2003, was primarily a concern over the
Company's inadequate information disclosure and
transparency. As such, it is quite difficult for general
investors to timely assess JXCC's hedging strategies and
maximum exposures in the volatile copper spot and futures
market, thereby undermining the predictability of its
volatility in commodity trading and hedging.  The change in
outlook is prompted by Xinhua Far East's intensified concern
that JXCC has become increasingly vulnerable to trading
surprises amid prevailing strong volatilities in copper
spot and futures market.

    Xinhua Far East has observed from the Company's public
information that JXCC has maintained and managed open
positions in copper futures markets which have resulted in
net hedging gains or losses.  However, there is inadequate
disclosed information about critical aspects in risk
management, such as maximum trading exposures and stop loss
limits.  Thus it is challenging for investors to assess if
the company can maintain a stable financial profile in a
timely manner, particularly during times of high market
volatility.  As a result, uncertainty over an abrupt change
in the company's credit profile has also increased. 

    Xinhua Far East noted that the gain/loss resulting from
the Company's  futures trading has been rising considerably
in recent years, and the figure is subject to further
increases as the market becomes more volatile and the
Company expands its production scale.  In 2005, the Company
incurred a net loss of RMB 546 million, or 29.5% of its net
profit, from its positions in the futures market, compared
with a 10.3% gain, 12.2% loss, and 4.3% gain in 2002, 2003,
and 2004, respectively.

    Xinhua Far East recognizes the Company's leading
position in China's copper industry and its ability to
generate positive operating results and sound financial
profile in 2005.  Xinhua Far East will reconsider the
rating in the event that the Company provides more timely
disclosure of its futures trading strategies and risk
management practices to public investors.

    JXCC is China's largest copper producer.  In 2005, it
produced 422 thousand tons of copper, about 16.8% of the
total national output.  The Company also realized a
turnover growth rate of 25.5% and net profit growth rate of
61.9% in 2005. 

    Jiangxi Copper is a constituent of the Xinhua/ FTSE
China 200 Index. As of market close on April 28, 2006, its
total market capitalization and investable capitalization
were RMB17.5 billion and RMB3.5 billion respectively. 

    For the rating report summary, please visit
http://www.xinhuafinance.com/creditrating .

    Note to Editors:

    About Xinhua FTSE China 200 Index

    Xinhua FTSE China 200 Index is the large cap index in
the Xinhua FTSE China A Share Index Series and includes the
top 200 companies in China by market cap.  It is designed as
a tradable index and is calculated in real-time every 15
seconds.  For daily data and further information, see
http://www.xinhuaftse.com .

    About Xinhua Far East China Ratings

    Xinhua Far East China Ratings (Xinhua Far East) is a
pioneering venture in China that aims to rank credit risks
among corporations in China.  It is a strategic alliance
between Xinhua Finance (TSE Mothers: 9399), and Shanghai
Far East Credit Rating Co., Ltd.  Shanghai Far East became
a Xinhua Finance partner company in 2003 and the first
China member of The Association of Credit Rating Agencies
in Asia in December 2003.

    Capitalizing on the synergy between Xinhua Finance and
Shanghai Far East, Xinhua Far East's rating methodology and
process blend unique local market knowledge with
international rating standards.  Xinhua Far East is
committed to provide investors with independent, objective,
timely and forward-looking credit opinions on Chinese
companies.  It aims to help investors differentiate the
credit risks among the corporations in China, thereby,
cultivating their awareness and promoting information
disclosures and transparency in China market. 

    For more information, see
http://www.xfn.com/creditrating .

    About Xinhua Finance Limited

    Xinhua Finance Limited is China's unchallenged leader
in financial information and media, and is listed on the
Mothers board of the Tokyo Stock Exchange (symbol: 9399)
(OTC ADRs: XHFNY).  Bridging China's financial markets and
the world, Xinhua Finance serves financial institutions,
corporations and re-distributors through four focused and
complementary service lines: Indices, Ratings, Financial
News and Investor Relations.  Founded in November 1999, the
Company is headquartered in Shanghai with 21 news bureaus
and offices in 18 locations across Asia, Australia, North
America and Europe.  

    For more information, please visit
http://www.xinhuafinance.com . 

    About Shanghai Far East Credit Rating Co., Ltd

    Shanghai Far East Credit Rating Co., Ltd. is the first
and leading professional credit rating company with
comprehensive business coverage in China.  It is an
independent agency established by the Shanghai Academy of
Social Sciences with the mission to develop internationally
accepted standards for capital market in China.  The company
is a pioneer in conducting bond-rating business in China. 
For years, it has been authorized by the Shanghai branch of
the PBOC to undertake loan certificate credit rating.

    Since establishment, it has rated over 1,000 corporate
long-term bonds and commercial papers, based on the
principles of objectivity, fairness and independence.  The
company has also maintained over 50% market share in the
loan certificate-rating sector in Shanghai for three
consecutive years.  With its strong local presence and
knowledge, it provides investors with unique and the most
insightful credit opinion. 

    For more information, see http://www.fareast-cr.com .

    For more information, please contact: 

    Hong Kong
     Joy Tsang, 
     Corporate & Investor Communications Director, 
     Xinhua Finance
     Tel:   [phone] or
[phone]    
     Email: [e-mail]

    US
    Taylor Rafferty (IR/PR Contact in US)
     David Leeney
     Tel:   [phone]
     Email: [e-mail]

SOURCE  Xinhua Far East China Ratings