China’s Minmetals Resources has launched a C$1.3bn (US$1.25bn) takeover offer for Anvil Mining, a Toronto-listed copper producer, in a move that underscores the rising international profile of Chinese mining companies.
Chinese miners have been slowly but steadily advancing their overseas presence, as China’s consumption of key commodities such as copper, gold and coal continues to grow.
Minmetals announced Friday it would offer C$8 per share for Anvil in a friendly deal that has the approval of Anvil’s board and major shareholder, Trafigura Beheer. The price is a 30 per cent premium to Anvil’s 20-day trade-weighted average.
Anvil is a junior miner whose main asset is the Kinsevere copper mine in the Democratic Republic of Congo (DRC). The mine is expected to produce 36,000-38,000 tonnes of copper this year, and is in the middle of an expansion project that will increase output to 60,000 tonnes of copper cathode.
“Anvil’s copper operations are an excellent fit with MMR’s [Minmetals Resources] strategy to build an upstream, international diversified base metals company,” Minmetals said.
The deal marks the second time this year that Minmetals has tried to acquire copper assets in Africa.
In April, Minmetals offered an unsolicited C$6.3bn bid for Equinox Resources, a junior miner that operates a copper mine in Zambia and is developing a copper-gold project in Saudi Arabia. At the time it was the largest ever unsolicited takeover attempt from a Chinese miner, and the bid elicited an angry response from Equinox management, who said it undervalued their company.
Minmetals dropped the bid after a higher offer emerged from Barrick Gold, the Canadian miner, which offered C$7.3bn for Equinox.
State-owned Minmetals is one of the largest commodities trading houses in China but has shifted strategies to expand its mining assets in recent years, particularly overseas mining assets. After acquiring most of the assets of Australian miner Oz Minerals in 2009, Minmetals promoted the senior management of Oz to lead their international acquisition efforts through a Hong Kong-listed subsidiary, Minmetals Resources.
China is the world’s biggest consumer and importer of copper, a key ingredient for buildings, cars, refrigerators and other everyday items.
David Lamont, chief financial officer for Minmetals Resources, said the company will be looking for more assets like Anvil as it pursues its upstream expansion plans.
“Our aspiration is to see ourselves in the next three to five years growing into one of the top mid-tier mining companies,” said Mr Lamont. “We feel that we are underweight in copper. Copper is a market that we see through the medium to long term as being very strong.”
He acknowledged that being part of a state-owned Chinese company has its advantages when operating in environments such as the DRC. “We are able to leverage the China diplomatic relationship with the DRC, which gives us a bit of an edge that other companies may not have.”
Minmetals will be looking at further copper assets in southern Africa and in South America as it expands its portfolio, Mr Lamont added. The company is targeting acquisitions valued at between $1bn and $7bn, he said.
The Minmetals-Anvil deal comes after Anvil announced in August that it was conducting a strategic review. Anvil said it received several acquisition offers as part of that process, and unanimously decided on Minmetals as the best deal for shareholders.
Shares in Minmetals Resources were down 1.7 per cent in Hong Kong on Friday, versus an overall fall in the Hang Seng index of 2.3 per cent.
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