Aluminum Corp of China (Chalco)'s bid to take a controlling stakein Canadian coal miner SouthGobi Resources, which mainly operatescoal mines in Mongolia, may face hurdles due to policyuncertainties in Mongolia, analysts said yesterday. State-run aluminum giant Chalco said that it aims to purchase a 56percent to 60 percent stake in SouthGobi at the price of up to $1billion. But the Mongolian government recently enacted a bill whichseeks to impose a 49 percent cap on foreign ownership in keyindustries including the country's booming mining sector. SouthGobi said Wednesday that one of its subsidiaries has beeninvolved in investigations by Mongolia's anti-corruptionauthorities, which has added further uncertainties to Chalco'stakeover bid. Chalco did not comment on the acquisition bid when contacted by theGlobal Times yesterday. "It is very hard for Chalco to successfully get a controllingstake in SouthGobi in view of the political uncertainties," MuWenxin, a senior analyst with commodities portal Umetal, told theGlobal Times yesterday. Analysts said that the current investment environment in Mongoliais not very favorable to Chinese investors. "The Mongolian government on the one hand needs foreigninvestors to help in developing its resources, but on the otherhand, sometimes tends to be protective to their naturalresources," said Mu. Peter Markey, China mining and metals industry leader at Ernst& Young, said a better time for Chinese companies to makeacquisitions would be after the Mongolian election in June. Ernst & Young also noted in a report that "resourcesnationalism" has become a growing source of uncertainty ininternational acquisitions during the economic slowdown. "Chinese companies can always choose not to seek a controllingstake in international acquisitions, which can serve as a way toavert such political risks," Mu noted. Despite the uncertainties, analysts said that there will beincreasing cooperation between the two countries in naturalresources. "The exploration cost in Mongolia is comparatively low. Giventhat Mongolia also considers China as a crucial market, the twocountries will see more cooperation in future," Li Chaolin, ananalyst from the China Coal Transportation & Sales Society,said yesterday. Chalco said in April that it will also buy a 29 percent stake inWinsway Coking Coal, which owns coal mines in Mongolia. The e-commerce company in China offers quality products such as Plastic Agglomerator , Single Shaft Shredder Manufacturer, and more. For more , please visit Plastic Granulating Machine today!
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