Hanlong courts SOEs for African iron ore deal
Infrastructure investor seeks tie-up with state firms to help develop project in Cameroon
Sichuan Hanlong Group, an investor in highways and power projects, is in talks with Chinese state-owned companies to develop an iron ore project in Africa owned by Australia's Sundance Resources.
Hanlong, which plans to buy the stake it does not own in Sundance for A$1.14 billion (HK$9.16 billion) is considering partnerships with state-owned enterprises on a request from government agencies, it said yesterday.
Hanlong plans to complete the purchase of Sundance by March 1, it said.
Beijing is urging Chinese companies to buy assets overseas and secure energy and commodity resources to meet domestic demand. A partnership with a state-owned company might help Hanlong secure financing, said Xu Zhongbo, chief executive at researcher Beijing Metal Consulting.
"Partnering with state enterprises will help make it easier to get the deal done," he said.
Hanlong, which owns 14.15 per cent of Sundance, delayed the acquisition after China Development Bank failed to agree on terms for a loan by a December 13 deadline and asked for time to review a mining convention by the government of Cameroon and a yet-to-be-issued mining permit from the Republic of Congo, countries where Sundance owns assets.
Paul Armstrong, an external spokesman for Sundance, could not be reached by phone and did not immediately respond to an e-mail seeking comment. Three calls to China Development Bank's press office were not answered.
Louis-Paul Motaze, general secretary in the Cameroon prime minister's office, would talk to the Chinese government and banks to accelerate the Sundance acquisition during a visit to China, Hanlong said, without specifying when the visit would take place.
Sundance owns the Mbalam iron ore project, which straddles Cameroon and Congo and has a planned annual capacity of 35 million tonnes of the steelmaking raw material.
The Australian company also plans to build a 510-kilometre railway line linking the Mbarga mine in Cameroon and the Nabeba mine in Congo to a deep-water export terminal on the coast of Cameroon, according to its website.
Hanlong had discussed construction of the railway link and port, mine development and offtake sales contracts with Chinese state-owned companies, the company said.