Asia-Pacific

Chinese miner backs out of deal after US objects

(Agencies)
Updated: 2009-12-22 08:12

WASHINGTON: A Chinese mining company has withdrawn from a deal with Nevada mining company Firstgold after the Obama administration objected on national security grounds, Firstgold's chief executive said on Monday.

"They basically let me know it was a tough call, but they felt they would not have success with the appeal and didn't feel it was in their best interest to push forward," Firstgold CEO Terry Lynch told Reuters.

China's Northwest Nonferrous International Investment Co had struck a $26.5 million deal with Firstgold to buy 51 percent of the company and help develop the Relief Canyon mine near Lovelock, Nevada.

The companies were told last week by the Committee on Foreign Investment in the United States the deal raised national security concerns because of its proximity to US military installations, Lynch said.

The interagency panel headed by the Treasury Department was expected to send President Barack Obama its recommendation on Monday that the deal be rejected.

But Lynch said Northwest's withdrawal meant the deal was dead so Obama would not have to decide the issue.

"It's terribly disappointing. I understand Northwest's position. They're just a mining company looking to grow their mining portfolio globally. They had no idea that there was going to be such a political firestorm. This is way more than they bargained for," Lynch said.

Firstgold owns several mining properties in Nevada it hopes to develop. The Relief Canyon mine is within 60 miles of Fallon Naval Air Station, which the Navy uses for tactical aviation training.