Sichuan Hanlong Group, an investor in highways and power projects, is in talks with Chinese state-owned companies to develop an iron ore project in Africa owned by Australia’s Sundance Resources Ltd.
Hanlong, which plans to buy the stake it doesn’t own in Sundance for A$1.14 billion ($1.18 billion), is considering partnerships with state-owned enterprises on a request from government agencies, it said today in an e-mailed statement. Hanlong plans to complete the purchase of Sundance by March 1, it said in the statement.
China is urging its companies to buy assets overseas and secure energy and commodity resources to meet domestic demand. A partnership with a state-owned company may help Hanlong secure financing, said Xu Zhongbo, chief executive officer at researcher Beijing Metal Consulting Ltd.
“Partnering with state enterprises will help make it easier to get the deal done,” he said. “Partnerships with several large companies would help reduce risks that the banks may apprehend.”
Hanlong, which owns 14.15 percent of Sundance at present, delayed the acquisition after China Development Bank failed to agree on terms for a loan by a Dec. 13 deadline and asked for time to review a mining convention by the government of Cameroon and a yet-to-be-issued mining permit from the Republic of Congo, countries where Sundance owns assets.
Sundance gained 1.6 percent to 32 Australian cents at the close in Sydney. Paul Armstrong, an external spokesman for Sundance, couldn’t be reached by phone and didn’t immediately respond to an e-mail seeking comment. Three calls to China Development Bank’s press office weren’t answered.
Louis-Paul Motaze, general secretary in the Cameroon prime minister’s office, will talk to the Chinese government and banks to accelerate the Sundance acquisition during a visit to China, Hanlong said in the statement, without specifying when the visit will take place.
Sundance owns the Mbalam iron-ore project, which straddles Cameroon and Congo and has a planned capacity of 35 million metric tons of the steelmaking raw material annually. The Australian company also plans to build a 510-kilometer (317-mile) railway line linking the Mbarga mine in Cameroon and the Nabeba mine in Congo to a deep-water export terminal on the coast of Cameroon, according to its website.
Hanlong has discussed construction of the railway link and port, mine development and offtake sales contracts with Chinese state-owned companies, it said in the statement.