NewChinese mine companies in talks for stake in Barrick’s Veladero gold mine in Argentina

China’s Zijin Mining Group Co Ltd and Shandong Gold Mining Co Ltd have held separate talks with Barrick Gold Corp to buy a 50 per cent stake in its Veladero gold mine in Argentina, according to four sources with knowledge of the process.

Veladero is one of Barrick’s five core mines, which are all in the Americas. It is expected to produce between 580,000 and 640,000 ounces of gold this year.

The high quality of the mine, production capacity and the prospect for geographical diversification have appealed to the state-owned Chinese suitors, said three of the sources, who requested anonymity because the matter is private. All of the persons spoke over the past week.

Barrick, the world’s biggest gold miner, has not launched a formal sales process for Veladero, and there is no certainty that the talks will result in a transaction, the sources said.

A potential sale of a 50 per cent stake could fetch Barrick more than US$1 billion, two of the sources said. Barrick, Shandong and Zijin declined to comment.

Last month, operations at Veladero were shut down for more than two weeks after a cyanide spill at the high-altitude mine. This was the second cyanide spill at the mine in a year.

The deal would be the latest instance of Chinese companies investing in Latin America’s resource-rich commodities sector, partly to help feed domestic demand. Chinese investors have poured billions into Latin American acquisitions in recent years, buying into copper and iron ore miners, oil and gas concessions and power grids.