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Hurdles stop Chalco's bid for SouthGobi
By Richard Fu |
September 4, 2012, Tuesday
|
Print Edition
Print Edition
ALUMINUM Corp of China Ltd has officially dropped a C$925 million (US$938 million) bid for a majority stake in Mongolia-focused coal producer SouthGobi Resources Ltd due to regulatory hurdles.
The Chinese company, better known as Chalco, in April proposed to buy up to 60 percent of Vancouver-based SouthGobi for C$8.48 a share. But the Mongolia passed a law in May restricting foreign state companies from controlling assets in key areas such as mining.
"The proposed transaction has minimal prospects of obtaining the necessary regulatory approvals within an acceptable time frame," Turquoise Hill Resources Ltd, which owns 58 percent of SouthGobi, said in a statement yesterday. "As a result, Turquoise Hill and Chalco have agreed to terminate the lock-up agreement."
Chalco and Turquoise Hill, which was formerly Ivanhoe Mines, had twice agreed to extend the time for the offer to be made, with the latest offer period set to expire today.
Analysts said the widely-expected termination makes sense for Chalco because of weaker SouthGobi shares, last traded at C$2.69 in Toronto on August 31. SouthGobi's Hong Kong-listed shares tumbled 5.57 percent yesterday before the announcement.
Chalco is diversifying from its core aluminum smelting business to iron ore and coal.
The Chinese company, better known as Chalco, in April proposed to buy up to 60 percent of Vancouver-based SouthGobi for C$8.48 a share. But the Mongolia passed a law in May restricting foreign state companies from controlling assets in key areas such as mining.
"The proposed transaction has minimal prospects of obtaining the necessary regulatory approvals within an acceptable time frame," Turquoise Hill Resources Ltd, which owns 58 percent of SouthGobi, said in a statement yesterday. "As a result, Turquoise Hill and Chalco have agreed to terminate the lock-up agreement."
Chalco and Turquoise Hill, which was formerly Ivanhoe Mines, had twice agreed to extend the time for the offer to be made, with the latest offer period set to expire today.
Analysts said the widely-expected termination makes sense for Chalco because of weaker SouthGobi shares, last traded at C$2.69 in Toronto on August 31. SouthGobi's Hong Kong-listed shares tumbled 5.57 percent yesterday before the announcement.
Chalco is diversifying from its core aluminum smelting business to iron ore and coal.
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