Chinese firm expresses continuing interest in Australia's Indophil
SHANGHAI - The Chinese gold and copper miner Zijin Mining Group Co Ltd has not lost interest in the Australian miner Indophil Resources NL and is closely watching takeover developments, the company said on Friday.
"We are still closely eyeing developments at Indophil ... such large mines are important to us so we didn't just forget about it after we dropped the bid," Zijin's board secretary Zheng Yuqiang told Reuters in an interview.
Zheng did not say whether Zijin was considering relaunching a bid for Indophil, which ended exclusive talks with San Miguel Corp, a conglomerate based in the Philippines, last month.
Zijin dropped its A$545 million ($563 million) takeover offer for Indophil in June 2010, after facing lengthy delays in securing approvals from the Chinese provincial government.
Zijin Chairman Chen Jinghe also said the company was focusing on acquisitions in Southeast Asia, particularly in the Philippines and Indonesia.
Chen said Zijin has just set up local offices in both countries to investigate investment opportunities and has also earmarked 5 billion yuan ($763.5 million) for overseas acquisitions.
"Chinese miners have fairly low reserves when compared with international companies. We may be very aggressive in exploration at home, but we have to venture overseas to grow our reserves if we want to compete on the global stage," said Chen.
Indophil owns a 37.5 percent stake in the undeveloped Tampakan copper and gold mine in the Philippines, which has been touted as potentially one of the world's largest finds.
However, developing the massive mine is not without its risks.
Tampakan, part-owned and operated by Xstrata Plc, is located on Mindanao island in the Philippines and has been targeted by guerrilla groups and protests by illegal miners. In 2009, an Xstrata contract worker was shot dead and two others injured near the project in an attack that police blamed on guerillas.
Although the current political turmoil in North Africa has highlighted the risks of investing in resource-rich but politically unstable regimes, Chinese companies will continue to be drawn to Africa because of the continent's wealth of resources, Chen said.
"There may be unrest and there may be new governments. But the likelihood of a new government nationalizing a country's resources or overturning previous agreements is very, very low," he said.
"If there is an attractive project with large resources, we're still going to invest because any turmoil will only delay developments by a few years. But the cost of not investing will be much more further on down the road."
Zijin said it planned to produce 62.57 tons of gold in 2011, down from 2010's 69.07 tons, because it will cut low-margin production of gold that it refined for other companies.
(China Daily 04/02/2011 page10)