SouthGobi Resources has dismissed its president and chief executive, Alexander Molyneux, after Aluminum Corp of China this month called off its bid to acquire up to 60 per cent of the coal miner. State-owned Chalco said on September 3 it had cancelled its plan to acquire SouthGobi because of the minimal prospects of its gaining Mongolian government approval. Chalco, the world's third-largest aluminium producer, had announced in April it planned to acquire the stake in the Canadian company for C$925.28 million (HK$7.25 billion) from Turquoise Hill Resources. Turquoise Hill owns 57 per cent of SouthGobi, according to the Hong Kong stock exchange. Three directors resigned from SouthGobi on September 3 after the bid was cancelled. The resignations should improve SouthGobi's relationship with the government of Mongolia, where its mining operations are based, said Basil Hwang, a managing partner at US law firm Dechert. "Now that Chalco has pulled out, SouthGobi's political risk is limited," he said. "The Mongolian government should be less worried. Mongolians fear Chinese domination." China's sovereign wealth fund, China Investment Corp, owns 14 per cent of SouthGobi, which is listed in Hong Kong, Singapore and Toronto. "It's a positive development. The Mongolian government didn't want Chalco to increase its influence in Mongolia," said an unnamed analyst. In April, the Mineral Resources Authority of Mongolia said it had requested the suspension of some of SouthGobi's mines in Mongolia, including its main asset, the Ovoot Tolgoi coal mine. It said the move was in connection to Chalco's proposal to acquire SouthGobi. In May, the authority said the suspension had been lifted but Ovoot Tolgoi's licence needed to be discussed in parliament. The uncertainty over whether the government would order a halt to operations at Ovoot Tolgoi would lead to a sharp fall in SouthGobi's sales in the third quarter, said a report by JP Morgan, which predicted a core loss of US$15 million for SouthGobi this year. "I think the Mongolian government will reinstate SouthGobi's licences. People are rational and will come to their senses," Hwang said. SouthGobi said Molyneux and the three former directors would be replaced by six former executives of Rio Tinto, the ultimate controlling shareholder of the company. Ross Tromans is the new president and chief executive while Kay Priestly, the chief executive of Turquoise Hill, is non-executive chairman. In January, Anglo-Australian mining giant Rio Tinto gained control of Turquoise Hill (then called Ivanhoe Mines), thereby gaining control of SouthGobi. SouthGobi shares yesterday rose 0.34 per cent to HK$17.62.