Chalco delays SouthGobi takeover bid

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Under a previous agreement, Chalco had until July 5 to make the bid for up to 60% of the Mongolia-based miner, but the date has now been revised to August 3.

Thereafter, the bid must be taken up after 36 days at the earliest, according to a statement.

Chalco announced the original intended bid in early April and its shareholders approved the $930 million acquisition last week.

The takeover had prompted the Mineral Resources Authority of Mongolia (MRAM) to announce in April a suspension of SouthGobi’s licence to review the implications of the deal.

While SouthGobi has yet to receive any official notification to suspend exploration and mining, the uncertainty has resulted in its customers cutting orders and the company curtailing mining activity at its flagship Ovoot Tolgoi coking coal mine.

The deal also sparked public outcry in Mongolia and accelerated the passage of a new foreign investment law in May.

Any foreign investments worth more than 100 billion tugriks ($75 million) that are for stakes exceeding 49% in companies in certain strategic sectors will now require government and parliamentary approval.