Message Jeu 13 Oct 2011 09:57

Metorex proposed takeover by Jinchuan Group may probably be

Metorex proposed takeover by Jinchuan Group may probably be finalized by November
Thursday, 13 Oct 2011

South Africa’s leading miner, Metorex Mining Limited’s proposed takeover by China’s Jinchuan Group may probably be finalized by November 18th 2011.

Jinchun Mining Group recently acquired 100% equity in Chibuluma Mine in Zambia, lying 400 kilometers north of Lusaka on the Copperbelt for USD 1.36 billion. This followed a consent from the Zambia’s antitrust body conditionally acceptance for the finalization, ostensibly trumping an offer by Brazilian giant, Vale Mining Limited for the same assets.

According to a joint statement by the two mining companies, which among other objectives, outlines for the proposed takeover had been received and which were still outstanding, the miners dispelled fears the deal would not materialize by the end of this year arguing that the proceedings were on schedule.

They further underplayed recent developments in Zambia, Africa’s largest copper producer and host to Chibuluma mine where the government reversed the sale of USD 5.2 million sale of Finance Bank to South Africa's FirstRand Bank. Owners of the lender contend that the bank has a total portfolio of USD 200 million in assets and liabilities.

In July last year, Chinese miner, Jinchuan Group Limited had offered to acquire 100% shares in Metorex for a value of USD 1.36 billion. However, the change of government in Zambia which ushered in Mr Michael Sata’s Patriotic Front had however, threatened the deal. Most analysts had speculated that Jinchuan Mining group would pull out of Zambia President Mr Michael Sata, a strong critic of Chinese investment won the Presidency.

The reconciliatory tonne of Mr Sata over his earlier anti Chinese' sentiments following his ascendance to power after the September 20th 2011 poll, during a meeting with Mr Zhou Yuxiao Chinese Ambassador to Zambia was a remarkable gesture that the fifth Zambian leader has had a change of heart and is prepared to work with Chinese companies to foster economic growth.

According to Zambia Development Agency, China alone has poured more than US$2.4 billion into developing the mining and copper sector creating more than 20,000 jobs for Zambians. China’s companies are still keen on exploiting the Zambian investment terrain following the planned investment by Non Ferrous Metals Africa Corporation of USD 400 million in Mulyashi open cast mine in Luanshya due to open by December this year. A further USD 1.6 billion has been earmarked for investment in Chambishi West and South ore bodies by the Bon Ferrous Africa Corporation.

According to the statement, Metorex stated that the South Africa’s Competition Commission and Zambia's Competition and Consumer Protection Commission both backed the acquisition last month with approval from China being awaited.

Until the authorization by the Zambian antitrust body, Metorex owned 85% shares in Chibuluma mine on the Copperbelt. The remaining 15% equity was initially owned by the Zambian government through the Zambia Consolidated Copper Mines Investment Holdings. The two companies remain optimistic that with the progression made in the foregoing transaction, little problem was anticipate to surface making the deal a viable and a going concern which might foster Jinchuan’s progression in expanding its mining prowess on the African continent.

Given the progress made to date regarding the fulfillment of the outstanding conditions, Metorex and Jinchuan do not at this stage anticipate any change to the timetable with the anticipated finalization date of the transaction being Friday, November 18th 2011. However, there is one ‘perceived hitch’ that might delay the progression of the deal by the two companies, which the duo felt needed to be redressed without further hiccups to ensure its success. The Zambian government needs to give a thumb up to the deal ‘spiced’ with concessions to the deal.

According to Zambian Competition Commission which sanctioned the sales, the planned take over and sale of Chibuluma mine by Metorex to Jinchuan the deal was ‘literally’ foregone unless other unforeseen hindrances arise between the two parties over the transaction.

The source close to the deal said that as far as the ZCC is concerned, our conditional consent was enough to enable the two parties proceed with the transaction unless there are other problems that might arise in the course of the sale, otherwise, the deal is as good as done.

However, despite the antitrust body’s conditional acknowledgement to the sale, the Zambian government, through the ministry of finance would still be required to give its consent to the change of control of Metorex and waive its rights to a special share it is entitled to hold in Chibuluma mine.

Additionally, under the securities and trading rules, the Zambian Securities and Exchange Commission is mandated to grant an exemption from the obligation to make a mandatory offer to ZCCM Investment Holdings, and the finance ministry for them having waived their rights.

According to data, the regulatory authorities in China need to give the Jinchuan bid for Metorex their consent. Jinchuan, has however, made considerable stride to ensure the success of the deal and it is hoped that the rake over might materialize before or after November 18th 2011.

Metorex said that with regard to the People's Republic of China consents, Metorex has been notified by Jinchuan that good progress has been made with respect to applying for the required approvals and consents from the relevant People’s Republic of China authorities. Jinchuan Mining Group is China’s leading copper and nickel producer. It has 51.3% equity in Zambia’s sole nickel producer, Albidon Limited’s Munali mine, lying about 60 kilometers south of the capital.

(Filed by Mr Kapembwa Sinkamba SteelGuru Correspondent Zambia)
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