Message Mar 22 Nov 2011 11:49

Re: Zambian government allows Chinese takeover of Chibuluma


Jinchuan Group authorize to own 100pct in Chibuluma mine by Zambian government
China’s diversified miner, Jinchuan Group has been authorized by the Zambian government to own 100% in Chibuluma mine in northern Zambia formerly majority owned by Metorex of South Africa.

Previously, Chibuluma mine was 85% owned by Metorex, the South African based miner with 15% equity owned by the Zambia Consolidated Copper Mines Investment Holdings.

According to sources close to the deal, a committee of experts constituted by the Zambian Security and Exchange Commission met last week and approved the 100 percent takeover of the Chibuluma mine in Zambia by Jinchuan Mining Group from Metorex.

A source at the Security and Exchange Commission and close to the deal said that “The committee met last week and approved the takeover of the mine.”

Metorex said that the Zambian government has granted a waiver to China’s Jinchaun Group to take over Chibuluma copper mine without putting up a mandatory offer which would have seen the new owner buy off shares held by the Zambian Government and other minority shareholders.

Chibuluma mine is owned by South African based and Johannesburg Stock Exchange listed Metorex Limited. In a statement jointly signed by the two parties, the Zambian Government had unconditionally and irrevocably consented to the completion of the scheme of the arrangement.

The Zambian Ministry of Finance and National Planning had also waived its rights to require Metorex to acquire its special share interest in the Metorex business over Chibuluma Mine in which government holds a 15% stake through the ZCCM-IH.

As a result of having obtained the mandatory offer waiver, Metorex is able to formally approach the Zambian Securities and Exchange Commission to obtain an exemption from any obligation to make a mandatory offer to minority shareholders of Chibuluma in accordance with the SEC regulations.

Earlier, exemption from the SEC from making a mandatory offer and securing consent from the People’s Republic of China were the only two steps left before the deal is concluded. With regard to the Chinese government last month Jinchuan Group reported that progress had been made towards getting approvals and consents from the relevant authorities.

Metorex said that application documentation has been formally accepted by the relevant authorities and Jinchuan advises that it believes the process is progressing well and anticipates receiving the relevant approvals and consents in due course.

Jinchuan Group, of China, in early July topped a previous bid by Vale for South Africa based Metorex, and Vale declined to match Jinchuan's offer. Vale had offered USD 1.125 billion for Metorex on April 8th 2011.

Metorex has two operating mines, Chibuluma located in Zambia in which it holds an 85 percent interest and Ruashi in the Democratic Republic of the Congo in which it holds 75% interest. Chibuluma has an estimated capacity of 18,600 tones of copper per annum contained in concentrates and proven and probable reserves of 3.5 million tonnes grading 3.8% copper.

Ruashi operates a mine and SX EW plant that have an estimated capacity of 36,000 metric tonnes per year of copper cathodes and 4,500 tonnes per year of cobalt. Proven and probable reserves stand at 22.2 million tonnes grading 2.4% copper. Metorex also has three projects in the DRC, one in the development phase and two in the exploration phase. In 2010, Metorex produced 51,569 tonnes of copper and 3,622 tonnes of cobalt.

According to data, Metorex is a mining company based in Johannesburg, South Africa. It has assets in the Democratic Republic of Congo, Zambia and elsewhere. A recent takeover bid by the Jinchuan Group of China valued the company at USD 1.1 billion.

Metorex was founded in 1975 by a consortium that included Anthony Simon Malone, and acquired Rand London Mines. In the following years Metorex acquired additional properties mining a variety of minerals including gold, coal, asbestos, copper, zinc and tin.

The mines were located in South Africa, Namibia and Zambia. In December 1999 Metorex merged with Consolidated Murchison and listed on the JSE and LSE exchanges. In the following years the company continued to expand through acquisition of new properties. In 2004 Metorex entered into a joint venture to develop the Ruashi copper mine site in the DRC and subsequently made substantial investments in this project.

In April 2011 Vale Mining announced its intentions to offer to purchase Metorex. Earlier Jinchuan said it would treat Metorex as a strategic vehicle for expanding its mining presence in Africa. Last month the South African and Zambian competition authorities approved the bid, now worth USD 1.1 billion and the main Zambian and DRC investors approved the deal.

Assets in the DRC include the existing Kinsenda Mine, the new Ruanshi copper and cobalt mine and the Dilala East and Lubembe deposit greenfields sites. In Zambia the company owns Chibuluma, a modern mechanized underground copper mine located near the copperbelt town Kalulushi that produces copper concentrate to be sold to smelters.

Copper Resources Corporation is a subsidiary of Meterox. As of November 2011 it held 92.5% interest in the Hinoba and Porphyry Copper project in the Philippines and 75% interest in Miniere de Musoshi et Kinsenda.

MMK formerly a subsidiary of Forrest Group owned the flooded Kinsenda and Musoshi copper mines in the Katanga Province. MMK became a subsidiary of Copper Resources Corporation as of 30 November 2005.

(Filed by Mr Kapembwa Sinkamba SteelGuru Correspondent Zambia)