China May Begin Mass Arrest Of Congolese Soon

Congo Won’t Approve Zijin, CAD Fund’s Bid for Platmin

The question that begs to be asked here is:- Will the Congolese inside China be facing the same fate as those Rio Tinto staffs after the failed deal ?

The Democratic Republic of Congo said it won’t approve a $284 million bid by China’s Zijin Mining Group Co. and the China-Africa Development Fund to buy copper mine developer Platmin Congo because it violates regulations.

The offer is “in violation of applicable regulations,” Alexis Mikandji Penge, the chief of staff for the minister of mining, said in an e-mailed statement. “As a result, it has no effect in the Democratic Republic of Congo.”

Zijin, China’s largest gold producer, and state-backed CAD are buying Platmin Congo to acquire assets including stakes in two copper-cobalt projects. Congo holds 4 percent of global copper reserves and is among the world’s largest producers of cobalt, according to the U.S. Geological Survey.

Zijin isn’t aware of the objection by the Congo government and is still “coordinating” for the investment, board secretary Zheng Yuqiang said today by phone. The company in its May 7 statement announcing the acquisition had said “there is uncertainty in obtaining” approvals from the two governments.

The shares dropped 1 percent to 8.09 yuan in Shanghai trading.

The benefits of the acquisition to Zijin “are almost negligible in the next three years, given their plan to start production in 2013 and the huge political risk in Congo,” said Owen Liang, an analyst at Guotai Junan Securities Co.

Ping-Pong

Platmin Congo’s assets include 68 percent stakes in both the Deziwa and Ecaille C copper-cobalt projects in Congo. Gecamines, Congo’s state-owned mining company, owns the remainder, the Mines Ministry said.

According to an August 2009 decision by the Congolese government, it is prohibited for a partner in a joint mining venture in Congo to change the partnership or transfer shares before the commercial production phase, Mikandji said yesterday in a separate statement.

“Companies were playing ping-pong on the stock market,” Dona Kampata, head of the Mines Ministry’s technical committee for planning and coordination, said in an interview in Kinshasa today. “They would buy a concession but there was no mining development, that was the fear of the government,” he said.

Congolese Mines Minister Martin Kabwelulu learned about the transaction from a story on the Internet, Kampata said. “They should have informed us before they did it,” he said.

Setback

The opposition is another setback to Zijin’s expansion plans, as the company seeks two major overseas acquisitions this year to increase reserves. Zijin is still awaiting Chinese regulatory approval for a A$545 million ($492 million) takeover of Australia’s Indophil Resources NL to gain a stake in Southeast Asia’s largest untapped copper and gold deposit.

Zijin will own 60 percent of a venture controlling the assets, with CAD having the rest. CAD, invested in by the China Development Bank Corp., has an initial capital of $1 billion and aims to support Chinese companies investing in Africa, according to Zijin’s statement.

“While the acquisition is pending approval from both the Congo and Chinese governments, we view it as a reflection of Zijin’s persistent efforts in seeking new growth drivers,” Credit Suisse Group AG analysts including Trina Chen said today. The acquisition may boost Zijin’s earnings before interest, taxes, depreciation and amortization by 6 percent after 2013, the analysts wrote.