Companies

Zijin says China, Congo will probably approve deal

(Agencies)
Updated: 2010-05-12 15:45

Zijin Mining Group Co said the governments of the Democratic Republic of Congo and China will probably approve its joint $284 million bid to buy copper mine developer Platmin Congo once a "misunderstanding" is resolved.

Approval from the Chinese government may come next month, though permission from Congo may be delayed, Vice Chairman Lan Fusheng told reporters today in Shanghai at the Mining & Asia Focus 2010 conference.

Zijin, China's largest gold producer, and state-backed China-Africa Development Fund said May 7 they agreed to jointly acquire Platmin Congo, which holds stakes in two copper-cobalt projects. The transaction is against the law, the chief of staff for the Congolese's minister of mining said May 9.

"I believe this will eventually receive approval from the Congo government because the project needs investment," Lan said. "Our project has no legal issue. There could be some misunderstanding on our plan."

Zijin shares rose 3 percent to HK$6.22 in Hong Kong at 10:53 am local time.

According to an August 2009 decision by the Congolese government, it is prohibited for a partner in a joint mining venture in Congo to change the partnership or transfer shares before the commercial production phase, said Alexis Mikandji Penge, the chief of staff for the mining minister.

African Investments

Gecamines, the Congolese state-owned mining company, has a 32 percent stake in both Platmin's projects.

"Investing in Africa has lots of uncertainties and risks, but cooperation will be the trend as Africa needs money to develop," said Helen Lau, a Hong Kong-based analyst with UOB Kay Hian. "I don't think Zijin's Congo investment will fail. It may just be lack of communications."

Congolese Mines Minister Martin Kabwelulu learned about the transaction from a story on the Internet, and wasn't informed beforehand, Dona Kampata, head of the Mines Ministry's technical committee for planning and coordination, said.

"They need to come and talk to us," Kampata said by phone yesterday from Kinshasa, the Congolese capital, adding that Platmin had still not contacted the ministry. They are partners with Gecamines and they have to come with Gecamines and talk to us. It's not too late."

Congo holds 4 percent of global copper reserves and is among the world's largest producers of cobalt, according to the US Geological Survey. Platmin Congo's assets include 68 percent stakes in both the Deziwa and Ecaille C copper-cobalt projects in Congo.

Sought Zijin

Zijin will own 60 percent of a venture controlling the assets, with its partner having the rest. China-Africa Development Fund, invested in by the China Development Bank Corp., has an initial capital of $1 billion and aims to support Chinese companies investing in Africa.

China-Africa Development "obtained the project first and they sought us to take over the development," Zijin's Lan said.

Separately, Lan said Chinese approval for its purchase of Australia's Indophil Resources NL is delayed because of the layers of government authorities it needs to go through.

"Chinese approving procedure is very complicated," he said. "We have to get approval from the county-level government, and then seek approvals from the other levels one by one."

Lan said he didn't know when approval from China will be granted. The A$545 million ($488 million) bid for Indophil, which owns a stake in Southeast Asia's largest untapped copper and gold deposit, has been extended to July 9 from the original closing date of March 19.