Aluminum Corp of China Ltd (Chalco), the country's biggest producer of the metal, today struck a deal to buy Mongolia-focused Ivanhoe Mines' stake in SouthGobi Resources, for C$925 million ($926 million) in order to diversify into other commodities like coal.
The acquisition is Chalco's biggest after it paid $1.35 billion for a stake in Anglo-Australian miner Rio Tinto's Simandou iron ore project in Guinea in July 2010.
State-owned Chalco will buy Ivanhoe's 57.6-per cent stake in SouthGobi for $928 million and offer to buy as much as 60 per cent of Ivanhoe at C$8.48 a share, or around C$533-million, a 28 per cent premium to the company's closing price on 30 March.
Ivanhoe said in a statement, should shareholders tender more than 60 per cent of the stock, the amount sold by it may be reduced.
Chalco has also agreed to buy the entire production of SouthGobi for two years.
SouthGobi Resources owns four coal projects in Mongolia, the producing Ovoot Tolgoi Mine; and three development projects, the Soumber Deposit, Zag Suuj Deposit and the Ovoot Tolgoi Underground Deposit.
Canada and Hong Kong-listed SouthGobi Resources also holds mineral exploration licences in Mongolia.