Zijin Can Spend Up to $3 Billion on Acquisitions
Zijin Mining Group Co., China’s largest gold producer, may spend as much as 20 billion yuan ($3 billion) on acquisitions, taking advantage of the global plunge in equities and asset values.
The drop in valuations provides “the biggest opportunity for companies like us,” Chairman Chen Jinghe said yesterday in Beijing at a conference. “We have sufficient cash. We won’t have any problem in making an acquisition as big as 20 billion yuan.”
Commodity prices and shares of mining companies have tumbled from records this year as investors expect a slowing world economy to crimp demand for raw materials. Beijing-based steelmaker Shougang Corp. is buying a stake in Australian iron ore producer Mt. Gibson Iron Ltd.
“Overseas assets are relatively cheap and the valuation of some companies has become attractive,” Shougang’s Chairman Zhu Jimin said yesterday at the same conference.
Shougang is seeking to buy iron ore and coal assets in Australia, and companies listed in Hong Kong, Zhu said in an interview after the conference.
The S&P/ASX 200 benchmark index in Australia dropped 38 percent this year, and Hong Kong’s Hang Seng Index was down 47 percent for the same period. The Bloomberg World Mining Index, which comprises 162 companies, has declined 61 percent this year.
Revive Growth
Shougang rose 2.3 percent to 3.15 yuan in Shenzhen trading at 10:41 a.m. local time. Zijin dropped 0.9 percent to 3.32 yuan in Shanghai. Shougang Concord International Enterprises Co., a Hong Kong-listed unit of Shougang, jumped 16 percent to HK$1.04 at 10:35 a.m. local time.
Shougang Concord plans to buy a stake in Mt. Gibson Iron.
China is the world’s largest buyer of metals and iron ore, a steelmaking ingredient.
China National Gold Group Corp., owner of the nation’s third-biggest gold producer, is also studying investments in overseas projects, General Manager Sun Zhaoxue, said today in an interview in Beijing.
“We prefer investment in countries such as Australia, where the environment is friendly,” Sun said. “If we buy, the key is price.”
State-owned China National Gold may tap insurance companies or funds to finance investments, using mining rights as collateral, Sun said.
Tags: iron-ore, Shougang