Zijin Mining Shells Out $550 Million for Tibet Copper Miner Stake
Zijin Mining Group Co. Ltd. said Sunday it will acquire a 50.1% share in a Tibet-based mining firm for 3.88 billion yuan ($547.7 million), potentially shoring up its balance sheet after the mining behemoth had a major setback in its Papua New Guinea (PNG) gold mining operations.
The company, which is best known as a gold miner, will have access to three of Tibet Julong Copper Co. Ltd.’s copper deposits, with a combined volume of 7.95 million tons of the metal, a Zijin Mining filing to the Shanghai Stock Exchange said. At present, over four-fifths of the company’s copper projects are overseas.
Of the three deposits, extraction rights have been granted at two, the Zhibula and Qulong mines, stretching through September and 2023, respectively. Tibet Julong is still seeking approval to mine at the third site, the Rongmu Cuola mine.
Mining rights are not the only issue at the trio of mines. Work halted at Qulong, the largest, last year due to a shortage of funds. Zijin’s filing says a further 7.2 billion yuan investment will be needed to start production there by the end of next year.
The company also has plans for a 150,000 ton-per-day mining and processing project across Qulong and Rongmu Cuola.
But the expansion plan could pose debt risks for Zijin, as Tibet Jilong’s debt-to-asset ratio surged last year to a perilous 83.2%.
However the new copper assets could prop up the firm’s balance sheet, which was dented when the PNG government announced in late April it would not allow Barrick Niugini Ltd., of which Zijin owns a 47.5% share, to extend its 20-year mining lease on the Porgera gold mine.
Zijin’s joint venture partner Barrick Gold Corp., which also owns 47.5% of Barrick Niugini, characterized the move as “tantamount to nationalization without due process.” The Papua New Guinea government has since accused Barrick of attempting to illegally export gold and silver out of the country.
Last week Barrick said a Papua New Guinea court granted the Toronto-based miner the right to challenge the decision, and judicial review will be held on July 20 to determine whether the PNG government followed due process in refusing the renew the license, Bloomberg reported.
Contact reporter Lu Yutong (firstname.lastname@example.org) and editor Joshua Dummer (email@example.com)
- MOST POPULAR