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Northwest mining project hits red light

By Hou Qingyang (China Daily)
Updated: 2009-12-23 08:06

China's Northwest Nonferrous International Investment Co Ltd (NWII) has withdrawn from a $26.5 million investment in a Nevada gold mine about 100 km from a US Naval base on Monday, after the US government objected to the deal on national security concerns.

Sun Feng, chairman of Northwest Nonferrous, said yesterday that despite the failure of its first investment in the United States, the company still consider it as a favorable investment destination.

"It is a pity that we could not bring the project into production. But we are still optimistic about business opportunities in the US," Sun said in a phone interview with China Daily.

"We didn't expect to run into national security issues. We were not aware that the mine was in the proximity of a naval base until the US government informed us last week," he said.

In July, Northwest Nonferrous signed a $26.5 million deal to buy 51 percent stake in Firstgold Corp, a Nevada-based mining company, to develop the Relief Canyon mine, approximately 177 km northeast of Reno, Nevada.

However, the Committee on Foreign Investment in the United States (CFIUS) said that it would recommend that US President Barack Obama reject the proposed investment, according to a statement released by Firstgold on Friday.

"We fail to see the connection between US national security and our principal asset, the Relief Canyon mine, which has existed at its present location since the early 1980s," Terry Lynch, CEO of Firstgold, said in the statement.

The air station is the US Navy's leading tactical aviation training facility.

Lynch said NWII's withdrawal meant the deal was dead in the water, and therefore Obama would not have to decide on the issue.

Experts pointed out that the event indicates the US remains skeptical about capital investments from China. "Chinese capital is not integrated into the world market and change will not take place overnight," said Li Xiaogang, a researcher at the Shanghai Academy of Social Sciences.