China's CNMC gets approval for Zambia mine purchase Thu

[bingogo]

China's CNMC gets approval for Zambia mine purchase
Thu Oct 15, 2009 5:06am GMT

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BEIJING (Reuters) - The Chinese and Zambian governments have approved China Nonferrous Metal Mining Corp's $50 million acquisition of an 80 percent stake in Zambia's Luanshya Copper Mines, Chinese state media reported on Thursday.

Luo Tao, CNMC president, said the state-owned Chinese firm aimed to lift Luanshya into the ranks of Zambia's top-three copper producers, the official People's Daily newspaper reported.

Earlier this year CNMC pledged to invest $400 million in Luanshya, which had been shut by its previous owners in December 2008, after taking over the running of its mines.

Critics in Zambia have said that the purchase price for Luanshya was too low and have questioned the transparency of the bidding process.

China's government and its state-controlled companies have invested billions of dollars in Africa to secure natural resources for its fast-expanding economy, a push that has brought Africa much welcomed cash but also fuelled concerns about China's growing influence.

[Clint]

CNMG's bid for Zambian copper mine wins gov't approval
Published: 15 Oct 2009 02:02:01 PST

China Nonferrous Metals Mining Group Co. Ltd.'s (CNMG) acquisition of Zambian Luanshya Copper Co. won final approval from China's State Administration of Foreign Exchange (SAFE) Tuesday.

The deal marks CNMG's third overseas purchase of mines and the second investment in Zambian copper mines following the State-owned nonferrous metal company’s acquisition and exploitation of the Zambian Chambishi copper mine in 1998.

"The purchase adds nearly 3 million tons of resource reserve to CNMG and the company is striving to increase its total capital to 50 billion yuan by the end of this year," Luo Tao, president of CNMG said Wednesday at a media conference.

Though the contract bid is worth $50 million and CNMG will have an 80 percent stake in the Zambian mine, the deal actually costs less for CNMG. The Zambian government has agreed to give a rebate of $9.8 million in mineral resource tax to CNMG, which means the transaction could be less than 20 percent of the stated agreed price.

The Luanshya copper mine is located in a copper belt in Zambia which is called the "country of the copper mine". Due to the financial crisis, the Luanshya Copper Company suspended business in 2008 and then its majority shareholder, Enya Holdings announced its withdrawal from Luanshya. Therefore, the Zambian government decided to seek a new investor for the company.

CNMG won the bid on May 8 this year and took over the Luanshya Copper Company in June.

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