Chinese investors can not start their newly planned expansion in the Russian gold mining industry at least this year, due to a latest decision of the board of Polyus Gold, one of Russia’s largest gold miners, not to sell a blocking stake in the company to the consortium of Chinese investors, led by Fosun Group, anounced Investor Intel newly.
The consortium, which is comprised of Fosun Group, Zhaojin Mining and Hainan Mining, will be able to acquire only 15 percent in Polyus Gold, not 25 percnt, as was initially planned by the investors.
Total amount of the deal is estimated at 1.4 billion (miljard) US dollar. The agreement will allow the consortium to get two seats on the board of Polyus Gold.
The decision of Polyus board has come across as an unpleasant surprise for Fosun and its partners, which hoped to get a partial control over Polyus Gold, (the company, which currently is in the list of enterprises, which have strategic importance for Russian economy, since it develops subsoils of federal significance and operates gold reserves of 64.3 million ounces) and, more importantly, to directly participate in the development of Sukhoi Log, Russia’s largest gold field, located in the Irkutsk region, which has the existing reserves of about 100 million gold ounces.
The development of the field was granted to SL Gold, a joint venture of Polyus Gold and the Russian state corporation Rostec, on January of the current year, as a result of an auction.
One of the possible reasons behind the decision of Polyus board not to sell a blocking stake in the company is the ever growing Chinese expansion into the Russian mining industry, as well as an example of neighbouring Kazakhtstan, where for the last 20-25 years Chinese investors have been able to buy up all the country’s largest mining assets.
Source: Investor Intel
