Mongolia opposes Chalco’s bid for Ivanhoe Mines' stake in SouthGobi Resources
14 Aug 2012
Aluminum Corp of China Ltd (Chalco), China's biggest producer of the metal, may see its proposed $926 million buyout bid for Mongolia-focused Ivanhoe Mines' stake in SouthGobi Resources fail after the Mongolian government voiced strong opposition to the transaction.
Although the proposed deal has the backing of SouthGobi's majority shareholder, Turquoise Hill Resources Ltd (formerly known as Ivanhoe Mines), it may not get the approval of the Mongolian government that has become vary of increased Chinese investments in the country's natural resources.
In April, Chinese state-owned Chalco had offered 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. (See: Chalco to buy Ivanhoe Mines' stake in SouthGobi Resources for $926 mn)
Under the deal, Chalco will buy Ivanhoe's 57.6-per cent stake in SouthGobi for $928 million and acquire as much as 60 per cent of Ivanhoe at C$8.48 a share, or around C$533-million.
Chalco had 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, including 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.
