SouthGobi Resources sacks second senior executive

Dismissal of chief operating officer follows the exit of company boss after failed takeover

PUBLISHED : Saturday, 20 October, 2012, 12:00am
UPDATED : Saturday, 20 October, 2012, 2:35am

SouthGobi Resources has fired its chief operating officer Curtis Church - the second dismissal of a senior executive - after Aluminum Corp of China (Chalco) cancelled its plan to acquire a controlling stake in the Canadian coal miner.

SouthGobi said in a filing to the Hong Kong stock exchange yesterday that the termination of Church was due to "failure to comply with his obligations" to the company.

SouthGobi, which has mining operations in Mongolia, dismissed its president and chief executive Alexander Molyneux last month after mainland state-owned Chalco called off its bid to buy up to 60 per cent of the coal miner.

Chalco, the mainland's third-largest aluminum producer, said on September 3 that it would pull out from the acquisition because chances for obtaining approval from the Mongolian government were slim.

Mongolia is reluctant to see China's increasing influence in the country.

Chalco had planned to buy the stake in SouthGobi from Turquoise Hill Resources for C$925.28 million (HK$7.26 billion).

Shares of SouthGobi, 14 per cent owned by China's sovereign wealth fund, dropped 0.93 per cent to HK$17.10 yesterday.

China, which consumes a third of the world's output of commodities, has been an active buyer of minerals worldwide. The buying spree by state-owned industrial powerhouses triggered fears of Chinese domination in some foreign countries.

In April, Mongolia suspended operations of some of SouthGobi's coal mines in the country, saying the move was a result of Chalco's plan to take over the Canadian firm.

"Chalco's decision to call off the deal wouldn't necessarily stop Chinese firms from aggressively seeking investments globally," said Zhou Dunren, a professor of economics at Fudan University. "Energy and resources will remain the major targets as China continues its 'go-outbound' campaign."

According to the Ministry of Commerce, China's non-financial overseas investment jumped 28.9 per cent to US$52.2 billion in the first nine months of this year.

Last year, outbound non-financial investments by Chinese firms were valued at US$65.6 billion, up 14 per cent from 2010.

By the end of last year, 18,000 mainland firms had invested US$424.8 billion in 177 countries.

Beijing began encouraging outbound investments by state-owned companies in 2007, in an effort to ease inflation in the domestic economy.