JPMorgan is continuing discussions with RBS and Sempra about acquiring the North American operations of the commodities and energy trader, one of the people said. Representatives for Edinburgh-based RBS, JPMorgan and Sempra declined to comment.

JPMorgan has been expanding its commodities operations, buying Bear Stearns Cos. energy business in 2008 and UBS AGs global agriculture and Canadian commodities divisions, a purchase it completed in 2009. The bank also bought U.K.-based ClimateCare, which helps clients reduce carbon emissions and trades reduction credits, in March 2008.

RBS bought a controlling stake in Sempra Commodities in April 2008 to benefit from rising investor interest in gold, oil and other raw materials. RBS invested $1.7 billion of equity into the venture, and Sempra Energy $1.6 billion. Sempra Energy received about $1.2 billion in cash from the 2008 transaction.

RBS Sempra Commodities, based in Stamford, Connecticut, with 1,100 employees worldwide, includes RBS Sempra Metals Ltd. which specializes in base metals, precious metals, steel and plastic markets, according to its Web site.

Metals Division

The metals division is a so-called ring-dealing member of the London Metal Exchange, the worlds largest market place for copper and aluminum.

The joint ventures energy-trading unit has about 1,200 customers and trades natural gas, power, oil, coal and emissions, according to its Web site.

Enova Corporation and Pacific Enterprises, which merged to form San Diego-based Sempra Energy in 1998, jointly purchased a natural gas and power-trading firm for $190 million from AIG in 1997. Sempra, owner of the largest U.S. natural gas utility, in 2002 bought Enron Corp.s metals trading division for $145 million.

By 2007, Sempra Commodities had grown to generate net income of $499 million, almost half of its parent companys profit of $1.1 billion for the year.

Its joint venture with RBS provided Sempra with increased financial support while allowing the utility to have a share in profits.

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Beijing will encourage sales of finished rare earths products but will limit exports of semi-finished goods, said Wang Caifeng, deputy director-general of the materials department of the Ministry of Industry and Information Technology.

Exports of raw ores already is banned, and said that will continue, Wang said at an industry conference.

Wang refused to confirm Chinese news reports that this years exports will be cut to about 8 percent below 2008 levels and future exports will be capped at similar levels. She said a plan will be be issued later this year.

“China, as a responsible big country, will not go back and will not take the road of closing the door,” Wang said.

But she said China has to limit output to protect its environment. She said production of one ton of rare earths produces 2,000 tons of mine tailings.

“China has made a big sacrifices for rare earths extraction,” said Wang, who said she has spent her whole 30-year career overseeing the industry. “It has damaged our environmental resources.”

Wang spoke at the Minor Metals & Rare Earths 2009 conference, cohosted by China Chamber of Commerce of Metals Minerals & Chemicals Importers & Exporters and Metal Pages Ltd., a London-based metals trading and information company.

China accounts for 95 percent of global production and about 60 percent of consumption of rare earths, which include such metals as dysprosium, terbium, thulium, lutetium and yttrium, according to the U.S. Geological Survey.

The United States supplied nearly all its rare earths needs from its own mines as recently as 1990, according to the USGS. But it says output plunged after the market was flooded with low-cost ore from China, which has lower labor costs and less-stringent environmental controls.

China wants to develop its industries to process rare earths and create products from them, Wang said.

China banned new wholly foreign-owned processing ventures in 2002 but some French and Japanese companies set up operations before that, Wang said. She said new foreign investors will be required to work through joint-ventures with Chinese partners.

China used 70,000 tons of rare earths in 2008 out of reported total global consumption of 130,000 tons, Wang said. She said she believed global consumption was higher than indicated by the official statistics.

Chinas demand for rare earths has surged as manufacturers shifted production of mobile phones, computers and other products to Chinese factories.

The United States and European Union have objected to similar Chinese controls on exports of other industrial materials. They filed a World Trade Organization complaint in June accusing Beijing of improperly favoring its industries by limiting exports of nine materials including bauxite and coke in which it is a major supplier.

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Associated Press researcher Bonnie Cao contributed to this article.

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“The inventory build today wasnt anywhere near as large as in the API report, which is giving the market support,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. “Its hard to be too bullish with inventories approaching a record.”

In other markets, copper futures rose for a second day on speculation that demand will climb in China, and orange juice climbed to the highest since December. The UBS Bloomberg Constant Maturity Commodity Index rose 0.5 percent to 929.2.

Crude oil for May delivery rose 23 cents, or 0.5 percent, to $49.38 a barrel on the New York Mercantile Exchange. Futures touched $47.37, the lowest since April 1, before the Energy Department report was released at 10:30 a.m. in Washington. Prices are up 11 percent this year.

Copper

Copper futures rose on speculation that Chinese demand will increase as inventories of scrap metal decline.

China, the worlds biggest metals user, plans to spend 4 trillion yuan ($585 billion) to spur economic growth, fueling demand for some raw materials. Inventories of scrap metal were down about 40 percent this year, a European industry group said on March 6. Copper has surged 42 percent this year on speculation that the global recession has bottomed.

“Shortages of scrap supplies in the first quarter and Chinas imports have been the main price drivers in copper so far,” Bayram Dincer, a commodity analyst at Dresdner Bank in Zurich, said in an e-mail. “We expect prices to trend lower in the short term, because China will slow down import demand and will wait for lower prices.”

Copper futures for May delivery gained 0.85 cent, or 0.4 percent, to $1.9985 a pound on the New York Mercantile Exchanges Comex division. The metal is still down 49 percent from a year ago.

Orange Juice

Orange-juice prices rose to the highest since December as a rally in equities eased concern that the economic slowdown may curb consumption and as a drought threatened to reduce yields in Florida. Coffee futures gained.

“It just does not rain,” said James Cordier, the founder of OptionSellers.com in Tampa. “The stock market is offering support,” along with the weather, he said.

Orange-juice futures for May delivery jumped 3.8 cents, or 4.9 percent, to 81.05 cents a pound on ICE Futures U.S. in New York. The price earlier reached 81.5 cents, the highest for a most-active contract since Dec. 4.

Commodities settled as follows:

Precious metals: June gold up $2.60 to $885.90 an ounce May silver up 13 cents to $12.34 an ounce July platinum up $12.40 to $1,187.40 an ounce June palladium up $9.70 to $235.70 an ounce

Livestock: June live cattle up 0.025 cent to 83.775 cents a pound May feeder cattle up 0.25 cent to 97.375 cents a pound June lean hogs down 0.1 cent to 73.35 cents a pound May pork bellies down 1.625 cents to 88.050 cents a pound

Grains: May soybeans up 16.5 cents to $10.06 a bushel May corn up 0.75 cent to $3.97 a bushel May wheat down 7.75 cents to $5.32 a bushel May oats down 2 cents to $1.97 a bushel

Food and Fiber: May coffee up 0.7 cent to $1.182 a pound July cocoa down $114 to $2,563 a metric ton July cotton up 1.48 cents to 49.39 cents a pound July sugar up 0.07 cent to 12.95 cents a pound May orange juice up 3.8 cents to 81.05 cents a pound

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Oz Minerals, the worlds second-largest zinc producer and Australias third-largest diversified mining company, said the revised deal would allow the company to pay off all its debts and still have 600 million Australian dollars ($410 million) left over.

The company was facing collapse if it could not refinance AU$1.2 billion ($780 million) in debt this week, and the interest from China Minmetals Nonferrous Metals Co. Ltd. was a lifeline.

In a release to the Australian Securities Exchange, Oz Minerals said the plan was to sell eight mines and other exploration and development assets for $1.2 billion to Minmetals.

Oz Minerals would retain the Prominent Hill gold and copper mine, which is located on a military weapons testing site in South Australia state. It will also keep operations in Indonesia, Cambodia and Thailand and some listed equity interests.

Treasurer Wayne Swan, the governments top finance official, said last Friday that Minmetalss original plan to buy all of Oz Minerals could not be allowed if it included Prominent Hill because of national security concerns.

The new plan shaves about $1 billion from the original offer, and still requires shareholder and regulatory approval.

“We believe it represents an attractive offer for Oz Minerals and our shareholders,” Oz Minerals Chairman Barry Cusack said in the statement.

Oz Minerals share price plunged about 8 percent after ending a nearly weeklong trading halt on Wednesday, but recovered ground as news of the new deal filtered through.

“This looks like a great get out of jail card,” Credit Suisse analyst Michael Slifirski told reporters on a conference call.

CEO Andrew Michelmore said Oz Minerals would still try to sell the Martabe gold project in Indonesia - one of the assets it keeps under the Minmetals deal - but “there is no way we will be selling it for a fire sale price.”

Late Tuesday, Swan approved plans by another Chinese company to increase its stake in the Fortescue Metals Group to up to 17.55 percent, from its current 9.8 percent.

Swan imposed conditions including that Hunan Valin directors must declare any conflict of interest if they are to sit on Fortescues board.

Fortescue CEO Andrew Forrest said the deal with Hunan Valin could be viewed as a blueprint for how Australian companies can negotiate investment from China without surrendering control or raising the hackles of regulators.

He said the deal took more than five years to negotiate and that Hunan Valin would have “absolutely no control” or influence over the companys management or marketing, and only one person on the board.

“This particular investment really does demonstrate how China, in a friendly way, in a minority way, in a totally non-controlled way, in a passive way, can invest in our operations without influencing the independence, direction or sovereignty” of Australia, Forrest told Australian Broadcasting Corp. on Wednesday.

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