Nippon Steel not to import from overseas mills in bid to save US Steel deal
Nippon is looking to close its $14.9 billion deal for US Steel by the end of the year.
Heavy machinery moves coal at the SouthGobi Energy Resources Ltd. Ovoot Tolgoi coal mine in Mongolia. (Image from archives)
Rio Tinto-controlled Turquoise Hill (TSE:TRQ) said Friday that a signed deal to sell the remainder of its stake in SouthGobi Resources (TSE:SGQ), which was supposed to finally cut ties with the Mongolian coal miner that was once worth over $2.4 billion, has fallen through.
The announced and signed share purchase agreement expired on April 30, 2015 “without the transaction contemplated thereunder having been completed,” the company said in the statement.
As a result, the Vancouver-based miner continues to own 56,102,000 shares or about 23.3% of SouthGobi’s issued and outstanding shares.
In July last year, Turquoise Hill agreed to sell the majority of its stake in the coal miner to Hong Kong-listed National United Resources Holdings for Cdn$12.8 million. And in February, it said Novel Sunrise Investments was buying the remainder for Cdn$8.5 million. That deal has been completed, the miner said.
Both deals were expected to close later this year and they would have left Turquoise Hill walking away with Cdn$21.3 million from the sale process, or less than 1% of the Cdn$2.3 billion the stake was once worth.
SouthGobi’s Ovoot Tolgoi mine, located 25 miles north of the Chinese border, was once billed as a cash cow. Back in 2008 Friedland dubbed the asset the “beluga caviar of coal.”
The Canadian company, previously known as Ivanhoe Mines and run by mining legend Robert Friedland, spun out its coal assets into SouthGobi in 2006 and received a controlling stake in the firm at that time.
SouthGobi’s Ovoot Tolgoi mine, located 25 miles north of the Chinese border, was once billed as a cash cow. Back in 2008 Friedland dubbed the asset the “beluga caviar of coal.”
Since then, Friedland and later Rio Tinto have tried to monetize the stake in SouthGobi. An agreement to unload a 60% stake in SouthGobi to Chinese aluminum giant Chalco for about Cdn$889 million in 2012, broke down because of obstacles put in place by the Mongolian government.
Turquoise Hill also has a 66% interest in the Oyu Tolgoi mine in southern Mongolia.
Comments
Mar
This shows you how much value destruction the Mongolian government can cause and why foriegn investors are staying away from Mongolia. The canary in the coal mine here is Rio Tinto/ Turquoise Hills Oyu Tolgoi mine project (A large world class copper gold deposit). The GOM has made some noise recently about coming to terms with Rio Tinto so that they can move phase 2 of this project forward but talk in Mongolia is cheap and nothing new and so far there has been little action . If a well seasoned major like Rio Tinto can not make a world class project work in Mongolia then other stand little chance of making anything work in Mongolia.