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INTERVIEW-Gunvor expands base metals business as banks retreat

* Hiring staff for India, South Africa, Chile

* Set up metals desk in Singapore in Feb

* This year building business in refined metals; focus on China

HONG KONG, April 25 (Reuters) - Swiss trading house Gunvor is expanding its drive into metals by adding staff globally as banks retreat from the sector, its head of industrial metals said on Friday.

Rene Van Der Kam told Reuters in an interview that the energy-focused trader is adding a worker each in India, South Africa and Chile as it looks to increase its metals trade.

That comes after it set up a metals desk in Singapore in February to build on a small team in Switzerland, as well as opening an office in Shanghai.

He said the firm is initially concentrating on trading refined metals, particularly copper in China, as well as zinc and tin, and is set to begin trading alumina, an intermediate product of aluminium, in the near future.

"For this year, the focus is to build (the business) out globally, to make sure we have critical mass. For next year, we'd like to build on raw materials," he said.

"With a lot of banks pulling out of this business, there are a lot of opportunities for trading companies with balance sheets and the right risk appetite."

A wave of banks have retreated from commodity trading due to tumbling profits in the face of tougher regulation, with Barclays saying last week it would will quit most of its commodities businesses.

Privately held Gunvor reported core earnings rose by a quarter in 2013 and said it expected to improve results again in 2014 despite the brief turmoil it faced last month due to the threat of sanctions given its co-founder's close ties to Russian President Vladimir Putin. Those concerns dissipated when that co-founder sold his stake in the firm.

Expansion into metals dovetails with Gunvor's diversification strategy, as well as its existing coal and iron ore businesses, Van Der Kam said.

In the first few years, the trader will aim for 50 percent of its metals business to come from structured deals and will also look to exchange equity stakes in return for raw materials, which has worked well in coal, said Van Der Kam.

"I see an opportunity to get sourcing from Africa. We are not shy in employing our balance sheet to get offtake," he said.

Still, for now Gunvor's focus for expansion remains in China where it has set up a wholly foreign owned enterprise (WFOE), entities that unlike local banks are allowed to trade physical commodities onshore and futures contracts through brokerages on the Shanghai Futures Exchange.

Trading houses and others with commodities trading WFOEs in China include Trafigura, Polish copper producer KGHM , Bank of China International, broker INTL FC Stone, Morgan Stanley, Standard Chartered, Standard Bank and Citigroup Inc.

"People have I think become a little bit too bearish on China. We remain bullish in the sense that it's a country that is constantly changing and this change will continue to offer opportunities."

(Reporting by Melanie Burton)