Aluminum Corp. of China (Chalco), the nation’s biggest producer of the metal, has dropped its $926 million bid for a majority stake in Mongolia-focused coal miner SouthGobi Resources.
Home to some of the world’s biggest unexploited mineral deposits, Mongolia has become one of the hottest destinations for billions of dollars of mining investment, but the government is wary about the growing Chinese presence in the sector.
The state-controlled Chinese aluminium giant’s April bid for control of SouthGobi was the trigger for a law passed in May that limits foreign ownership to 49 per cent for companies in strategic sectors including mining.
The government has also suspended a plan by an international consortium involving China Shenhua Energy and US-based Peabody to develop Mongolia’s giant Tavan Tolgoi coal mine.
Chalco and Turquoise Hill Resources Ltd, which owns a 58 per cent stake in SouthGobi, both cited the difficulty of obtaining regulatory approvals for the failure of the bid.
SouthGobi’s Hong Kong-listed shares slumped 5.57 per cent on Monday ahead of the widely-expected announcement to close at HK$20.35. The Toronto listed shares last traded at C$2.69, well short of the C$8.48 per share bid from Aluminum Corporation of China, or Chalco.