Sept. 29 (Bloomberg) -- Aluminum Corp. of China Ltd. dropped plans to buy a 30 percent stake in Mongolian coal exporter Winsway Coking Coal Holding Ltd. for HK$2.39 billion ($308 million), its second failed acquisition this month.
The agreement was terminated because it won’t be able to get approval from governments and regulators by a Sept. 30 deadline, the aluminum producer known as Chalco said in a statement to the Hong Kong stock exchange yesterday. Mongolia passed a law this year restricting foreign state-owned companies from controlling key assets.
Yesterday’s decision is the second time this month Beijing-based Chalco has abandoned a bid for a Mongolian coal miner because it wasn’t able to get regulatory approvals. The company said on Sept. 3 it terminated a C$925 million ($941 million) offer for a stake in SouthGobi Resources Ltd.
Foreign companies seeking more than 49 percent of strategic assets in Mongolia need approval from Parliament, according to a statement on the government’s website in May. The restriction means Mongolia joins Indonesia and Argentina in seeking to control ownership of resource assets to secure its economic future.
Chalco, China’s largest aluminum producer, proposed in April to become Winsway’s biggest shareholder by buying about 1.1 billion shares at HK$2.12 apiece from the company’s chairman. Winsway said in a separate Hong Kong stock exchange filing yesterday that the share sale was abandoned on Sept. 28 because the deal wouldn’t get government approvals on time.
Chalco was seeking coal and iron-ore assets after profit from its mining unit fell 67 percent last year on higher raw material and power costs.
Metallurgical-coal prices have tumbled this year as manufacturing in China, the world’s biggest steelmaker, contracted at the fastest pace since March 2009 and mines in Australia resumed output after flooding halted operations last year.
BHP Billiton Ltd., the world’s biggest coking coal exporter, settled the fourth-quarter benchmark contract for the fuel at $170 a metric ton, 40 percent less than a year earlier, Doyle Trading Consultants LLC said on Sept. 12.
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