Wed, Feb 07, 2007 - Page 11 News List

Top PRC miner bids for Monterrico

AP , SHANGHAI

A consortium led by China's biggest gold miner, Zijin Mining Group Co (紫金礦業集團), has made a US$185.4 million offer for British copper firm Monterrico Metals PLC, in what may become China's first outright takeover of an overseas listed company.

The proposed acquisition, announced earlier this week by Monterrico and Zijin, is the latest in a series of low-profile but substantial purchases of overseas mining assets by Chinese companies -- part of the country's quest to diversify supplies of strategically important resources.

Monterrico, a London-based resource company with shares traded on the Alternative Investments Market, holds rights to the undeveloped Rio Blanco copper and molybdenum deposits in northern Peru, which the company says could yield up to 25 million tonnes of copper ore a year.

Zijin holds a 45 percent share in the consortium, with Chinese copper miner Tongling Nonferrous Metals (Group) Inc (銅陵有色金屬) taking 35 percent and Xiamen C&D Corp (建發集團), a trading and real estate conglomerate, holding 20 percent, Zijin said in a statement to the Hong Kong Stock Exchange.

The consortium, dubbed Xiamen Zijin Tongguan Investment Development Co (廈門紫金銅冠投資發展), was set up in August to engage in mining investment, exploration and development.

Monterrico's board unanimously recommended that shareholders accept its offer.

Previous overseas acquisitions by Chinese companies have involved non-listed companies or joint venture arrangements, state media reports said.

China imports about 70 percent of all the copper it uses and wants a wider supply base. This week, President Hu Jintao (胡錦濤), on an eight-nation African tour, offered a multimillion dollar investment package to copper-rich Zambia, where Chinese firms have spent billions of dollars developing the sector.

In September, the Aluminum Corp of China (中國鋁業), or Chalco, acquired the rights to develop a bauxite mine and alumina refinery project, at an estimated cost of US$2.2 billion, in the Australian state of Queensland. Chalco has also committed US$1.6 billion to develop a bauxite and alumina project in Vietnam.

Like Chalco, which also has shares traded in Hong Kong, Zijin is keen to take advantage of its cash-rich position to expand its assets. It announced last week plans for an initial public offering in Shanghai to raise funds for further expansion.

"The proposed acquisition of Monterrico would represent an important increase in the company's resources and production," Zijin said of its acquisition of loss-making Monterrico.

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