Chemicals group Sinochem may be preparing a massive bid for PotashCorp, but Chinese companies aren’t only interested in Canada’s biggest companies. On Friday, China’s largest producer of nickel and cobalt, Jinchuan, agreed to buy a Canadian metals explorer for a fraction of the price that Potash could fetch.
That shows the many levels at which Chinese companies are expanding - thanks to their new-found wealth, their keenness to secure raw materials and technology, and the government’s “going out” policy, which encourages domestic players to push overseas.
Jinchuan already owns 14 per cent of Continental Minerals, which is listed on the TSX Venture Exchange. it will now pay $417m for the remaining shares, a 13 per cent premium on Continental’s previous closing trading price.
Continental Minerals is exploring a large copper-gold property in Xietongmen, in Tibet, China. It has discovered two deposits and is applying for licences to develop them. Added copper output will help diversify Jinchuan, which currently controls more than 90 per cent of China’s total nickel and platinum output, but ranks as only the country’s fourth-largest copper producer.
Chinese companies have announced or completed purchases of 17 North American companies during the past year, according to Bloomberg. Jinchuan bought a Canadian junior miner, Crowflight Minerals, in April for $140m, although unlike Continental, Crowflight’s mining activities are in Canada itself.
Stephen Leung, head of research at Kingsway Financial Services, told mergermarket that more cross-border mining deals are expected.