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Silk Road Fund mulls bidding for Glencore's gold mine in Kazakhstan

(Bloomberg)
Updated: 2016-07-11 09:08
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A saleswoman shows gold roses at a store in Lianyungang city, Jiangsu

province,Feb 6, 2015. [Photo/VCG]

    Bullish outlook on bullion may attract other investors

    China's Silk Road Fund, a $40 billion pool set up to invest along the ancient trade routes with Central Asia, is discussing a joint bid for Glencore Plc's gold mine in Kazakhstan.

    The fund is partnering with China National Gold Group Corp on a possible joint offer for the Vasilkovskoye mine, which could fetch about $2 billion, according to people with knowledge of the matter.

    The group is in discussions with Glencore, though there's no certainty it will win the bidding, the sources said, asking not to be identified because the information is private.

    According to its website, the Silk Road Fund was set up in 2014 with backing from the nation's sovereign wealth fund, State-owned Export-Import Bank of China and policy lender China Development Bank Corp.

    The Beijing-based fund may vie with Chinese gold producers Shandong Gold Mining Co. and Zijin Mining Group Co, which are also potential bidders for the asset, people familiar with the matter said last month.

    Chinese companies have announced $9.6 billion of mining acquisitions this year as commodity prices start to recover, a 36 percent jump from the same period in 2015, data compiled by Bloomberg showed.

    "Chinese miners are competing to secure gold assets, because there's a consensus that domestic demand will far outstrip local supply due to fast-growing investment demand," Wang Rong, an analyst at Guotai Junan Futures Co, said by phone from Shanghai on Thursday. "The valuation of gold assets might still have potential to rise given the bullish outlook in the bullion market now."

    China Molybdenum Co agreed in May to buy control of Freeport-McMoRan Inc's copper mine in the Democratic Republic of Congo for $2.65 billion, following a $1.5 billion deal in April for Anglo-American Plc's niobium and phosphate business. China National Gold said in April it will purchase Eldorado Gold Corp's Jinfeng gold mine in Guizhou province for $300 million.

 

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