China’s state-backed Zijin Mining has swooped to buy one of the most promising copper projects under development, as it looks to lock in supplies of a metal that is heading for a supply shortfall.
Zijin agreed to pay C$1.86bn in cash (US$1.41bn) for Canadian miner Nevsun Resources, which is developing a copper and gold project in Serbia. That trumped an earlier hostile bid by Canada’s Lundin Mining.
The deal is the latest move by Xiamen-based Zijin to acquire overseas mining assets, after purchases in Africa and Australia. Last week Zijin paid $1.26bn for a 63 per cent stake in Serbia’s largest copper smelter, RTB Bor.
The world’s largest miners are scrambling to increase their exposure to copper, which is poised for increased demand from its use in wiring in renewable forms of energy such as wind turbines. Without the development of new copper projects, analysts warn there will be a shortage of the metal by the middle of the next decade.
BHP Billiton, the world’s largest miner, on Wednesday paid $35m for a 6 per cent stake in Ecuador-focused copper explorer SolGold for $35m, pitting it against the company’s largest shareholder Australia’s Newcrest.
Others miners have also been expanding in copper. Last month Kaz Minerals announced plans to buy a copper mine in the Far East of Russia for $900m, while a month earlier miner Anglo American approved the development of a $5bn copper project in Peru.
Nevsun operates the Bisha copper and zinc mine in Eritrea and is developing the Timok copper and gold project in Serbia.
Zijin said it intended to “rapidly develop” Timok to bring it into production and explore for new deposits at Bisha.
“Nevsun is an exceptional operator, with a strong focus on safe, efficient and sustainable mining practices,” said Chen Jinghe, chairman of Zijin. “As the new owner we will continue that focus, and we look forward to working with stakeholders in Eritrea and Serbia to advance these mining and development assets.”
The Timok mine is split into two parts, an upper and lower zone. Nevsun estimates the upper zone will have a 10-year mine life producing more than 1.7bn pounds of copper. The lower zone is jointly owned with US miner Freeport-McMoran.
Nevsun had rejected five previous hostile bids by Lundin after an initial offer of C$1.5bn in May.
Zijin’s C$6-a-share offer represented a premium of 26 per cent over the latest offer made by Lundin in July, Nevsun said. It urged shareholders to accept the new bid.
“The all-cash consideration of C$6 per share better reflects the fundamental value of Nevsun’s mining and development assets, while also providing an appropriate change of control premium to our shareholders,” said Ian Pearce, Nevsun’s chairman.
“Zijin is a proven mining industry operator with a $10bn market capitalisation and a demonstrated record of successfully completing international transactions.”
BMO Capital Markets advised Nevsun on the deal, while Morgan Stanley acted for Zijin.
Source: FT.com
