Let's hope things stay friendlyANDY HOFFMAN
From Tuesday's Globe and Mail
Last updated on Wednesday, Aug. 12, 2009 02:44AM EDT
China's insatiable hunger for natural resources has officially turned hostile.
State-controlled Jilin Jien Nickel Industry Co. Ltd. launched a surprise $148.5-million unsolicited takeover bid for Canadian Royalties Inc. yesterday, marking one of the first times the Asian economic superpower has gone after foreign resource assets without first winning a friendly agreement with management.
China has become an active acquirer of foreign resources amid the global economic crisis, investing in copper, oil and iron ore needed to fuel its fast-growing economy. But despite massive financial resources and a mandate to diversify its $2-trillion (U.S.) in foreign exchange holdings into so-called hard assets such as commodities, most of China's resource deals have been friendly.
**
The unexpected bid for Canadian Royalties, which is developing the Nunavik nickel project in northern Quebec, marks a significant change in tactics for a Chinese state entity. "This is new. ... This could be the tip of the iceberg," one mining investment banker said.
Glenn Mullan, chairman and chief executive officer of Canadian Royalties, said the takeover offer blindsided his company. Neither Jien nor its Canadian partner, Goldbrook Ventures Inc. of Vancouver, which has a 25-per-cent stake in the company created to make the bid, contacted Canadian Royalties' management before launching the offer.
"This one has a long way to go. I think you'll see lots of interest in Canadian Royalties going forward," Mr. Mullan said in an interview.
**
Mr. Mullan said Jien and Goldbrook are taking a run at the weakened company in an attempt to pick up its valuable resources on the cheap. The Nunavik project contains approximately 20 million tonnes of ore, grading about 1 per cent nickel and 1 per cent copper. Because of its small size, the bid would not require Ottawa's approval under the Investment Canada Act.
**
In a more typical, friendly, deal struck last month, sovereign wealth fund China Investment Corp. (CIC) agreed to invest $1.74-billion to become the largest B-class shareholder in Teck Resources Ltd., Canada's biggest base metals miner.
_____________
complete article:
https://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/china-makes-unexpected-grab-for-canadian-miner/article1247540/