Chalco pulls out of second Mongolian deal
CHINESE-CONTROLLED aluminium giant Chalco, whose parent company is Rio Tinto's biggest shareholder, has pulled out of its second Mongolian resources deal in a month because of battles to get government approvals.
Chalco's inability to take a direct part in the Mongolian resources sector comes as Mongolia and China remain locked in negotiations over Chinese power supply to Rio's $US10 billion ($9.63bn) Oyu Tolgoi copper and gold mine in Mongolia. The talks are essential for operating the giant mine and processing plants, because if power cannot be secured Rio will not be able to hit its 2013 start-up goal.
No direct link has been made between Chalco's regulatory knock-backs and the power talks, but they do not bode well for negotiations between the two nations, which Rio chief Tom Albanese two months ago said he was confident would be resolved "shortly".
A Rio spokeswoman yesterday confirmed discussions were still under way and that executives were confident the power-supply deal would be signed in time for first copper production next year.
Poles and wires for the power have been built, but commercial terms have not been agreed upon.
The deal Chalco dropped last week was a $308 million purchase of a 29.9 per cent stake in Hong Kong-listed Mongolian coking coal exporter Winsway Coking Coal.
In a statement to the Hong Kong Stock Exchange on Friday, Chalco said the agreement with Winsway had been terminated "due to the fact that the company is unable to complete the process for the obtaining of the necessary approvals from relevant PRC (Chinese) and overseas government and regulatory authorities".
Mongolia passed laws this year restricting foreign state-owned entities controlling key assets.
While no comment on Mongolia's intervention in this deal was made, the termination comes less than a month after Chalco officially abandoned a $C926m ($907m) bid for up to 60 per cent of Canadian-listed Mongolian coal company SouthGobi Resources because there was little prospect of obtaining approvals.
Chalco's inability to take a direct part in the Mongolian resources sector comes as Mongolia and China remain locked in negotiations over Chinese power supply to Rio's $US10 billion ($9.63bn) Oyu Tolgoi copper and gold mine in Mongolia. The talks are essential for operating the giant mine and processing plants, because if power cannot be secured Rio will not be able to hit its 2013 start-up goal.
No direct link has been made between Chalco's regulatory knock-backs and the power talks, but they do not bode well for negotiations between the two nations, which Rio chief Tom Albanese two months ago said he was confident would be resolved "shortly".
A Rio spokeswoman yesterday confirmed discussions were still under way and that executives were confident the power-supply deal would be signed in time for first copper production next year.
Poles and wires for the power have been built, but commercial terms have not been agreed upon.
The deal Chalco dropped last week was a $308 million purchase of a 29.9 per cent stake in Hong Kong-listed Mongolian coking coal exporter Winsway Coking Coal.
In a statement to the Hong Kong Stock Exchange on Friday, Chalco said the agreement with Winsway had been terminated "due to the fact that the company is unable to complete the process for the obtaining of the necessary approvals from relevant PRC (Chinese) and overseas government and regulatory authorities".
Mongolia passed laws this year restricting foreign state-owned entities controlling key assets.
While no comment on Mongolia's intervention in this deal was made, the termination comes less than a month after Chalco officially abandoned a $C926m ($907m) bid for up to 60 per cent of Canadian-listed Mongolian coal company SouthGobi Resources because there was little prospect of obtaining approvals.
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