The tortuous journey of Chinalco and China Minmetals in acquiring overseas mining companies has not managed to slow down the pace of domestic mining firms’ overseas expansion. Taking advantage of the impact of the financial crisis, Jinniu Nickel, China’s leading nickel company, has recently scored several significant deals while snapping up assets at bargain prices overseas. The company disclosed today that it has acquired Australia’s Metallica Minerals Ltd through its Australian subsidiary for RMB 27.0493 million, thereby securing its position as the largest shareholder of the Australian firm. Earlier, a company official told the media: “Although nickel prices are indeed relatively low now, which has somewhat affected our financial performance, this does not undermine our ‘going global’ strategy. Participating in overseas mineral exploration and taking equity stakes in foreign mining companies are part of our long-term development strategy.” The company’s recent acquisition activities serve as the best illustration of this strategic approach.

Strongly attack one after another with the parent company.

Australia’s “leading position” in the mining industry

According to Gene Nickel’s acquisition announcement today, the company, through its holding subsidiary, Australian Gene Mining Pty Ltd., has acquired 22,854,462 shares of Australian Metallica at a price of A$0.2259 per share, for a total investment of A$5.1636 million (RMB 27.0493 million). This represents a 19.95% stake in the company. The funds for this acquisition will be entirely sourced from the company’s own reserves. With this acquisition, Gene Nickel will firmly establish itself as Metallica’s largest shareholder.
According to available information, Metallica is located in Queensland, Australia, and its business scope includes the exploration and development of nickel mines, coal mines, bauxite deposits, limestone, scandium mines, gold, and other base metals. The company was listed on the Australian Securities Exchange in 2004, and currently has a total of 114,562,628 shares outstanding.
Jin Nickel stated that, following its equity investment in Metallica, it has become the company’s largest shareholder. This aligns with the company’s development strategy, helps advance its internationalization efforts, increases its reserves of nickel resources, and enhances its competitiveness and sustainability within the industry. This investment will have a relatively minor impact on the company’s financial position.
Coincidentally, in mid-April, Jilin Haorong Nonferrous Metals Group, the parent company of GNL Nickel, had already acquired 14 million shares of the company through over-the-counter transactions, thereby becoming the largest shareholder of this Australian mining firm.
It is reported that Jilin Haorong acquired 14 million shares from another Australian mining company, Kagara, through its subsidiary in Australia. Combined with the 3.25 million shares Jilin Haorong already held, its total shareholding now reaches 15.1%, officially making it the largest shareholder of Metallica. However, the announcement did not disclose the specific amount paid for this acquisition.
Currently, nickel prices have surged in both the Chinese and international markets. Jinchuan Nickel, known as the “Nickel King of Asia,” has raised its ex-factory quotation for its products five times in a row within just one month, breaking through the 100,000-yuan-per-ton mark. This joint acquisition by Jinnick Nickel and its major shareholder could open up new avenues for the company to achieve performance growth.
However, industry insiders told reporters that, given the transaction involves Australian dollars and Chinese yuan, and considering the constant fluctuations in various foreign exchange rates, this investment will entail certain foreign exchange risks. Moreover, although Jien Nickel has become Metallica’s largest shareholder following the completion of the deal, its absolute shareholding ratio remains relatively low, and it has appointed only one director, leaving the risk that it may still fail to achieve effective control over Metallica.
Obviously, whether GNE’s latest overseas acquisition will be successful remains to be seen over time.

Frequently making moves overseas

Domestic integration temporarily postponed.

This acquisition of the Australian mining company Metallica is just a prelude to Jien Nickel’s recent overseas acquisitions. According to the company’s ambitious overseas acquisition plan, Jien Nickel will also invest 600 million yuan in mining projects in Canada and Papua New Guinea.
On April 11, Jien Nickel announced publicly that the company plans to raise 1.1 billion yuan through a targeted share issue. The company stated that after raising the funds, it will invest 600 million yuan in mining projects in Canada and Papua New Guinea, and use 500 million yuan to replenish its working capital.
Among the funds to be raised, 165 million yuan will be used to invest in and subscribe for shares of Canada’s Liberty Company. According to the share subscription agreement, upon completion of the subscription, the company will hold 51% of Liberty Company’s outstanding common stock equity; at the same time, it will also hold 186.99 million preferred shares, which can be converted into common shares at a 1:1 ratio at any time.
Jinchuan Nickel Industry stated that the combined resource reserves of Liberty’s three nickel mining projects total 2.972 million tons, containing 47,000 tons of nickel—a scale that is already quite substantial. The projects enjoy favorable development conditions, feature simple ore-processing technologies, and offer significant economic benefits. More importantly, the company has priority purchase rights for the nickel concentrate produced by Liberty, which further enhances its profitability.
In stark contrast to the vigorous overseas bargain-hunting efforts, Jien Nickel has quietly slowed down its pace of integrating domestic resources. In the first half of 2008, driven by soaring domestic nickel prices, Jien Nickel had begun acquiring and consolidating several mineral resources within Jilin Province. However, as nickel prices have since declined, this phase of work has been temporarily suspended and is now on hold. At the same time, the company emphasized that it has not given up on this integration effort at all; it continues to closely monitor the situation and remains committed to resuming the acquisition and consolidation of domestic resources once the nickel market recovers.