Chinese Company on US Forced Labour Watchlist to Acquire Canadian Gold Miner
Udumbara
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State-owned Chinese corporation Zijin Gold International says it has reached an all-cash deal to buy Canadian company Allied Gold Corp. for $5.5 billion in cash.
Zijin has offered $44 per share for the Toronto-based gold mining company, which owns and operates three mines in Africa and whose stock last closed at $41.75 on the Toronto Stock Exchange on Jan. 23 and rose past $43 on the morning of Jan. 26.
Allied Gold Chairman and CEO Peter Marrone said the deal is a lucrative opportunity for his company to sell at an all-time high.
Chinese Mining Companies
Zijin is one of the largest mining companies in the world with assets across the globe and is listed on the Hong Kong Stock exchange, last closing at the approximate equivalent of CA$7.46 on Jan. 26.The Zijin-Allied transaction is expected to be finalized by late April but first requires approval from two-thirds of Allied shareholders and from the federal government via the Investment Canada Act.
However, Zijin has had success in buying Canadian mining companies, such as its 2022 purchase of Toronto-based Neo Lithium Corp. for $960 million. Although it ultimately went through, the deal led to parliamentary hearings in which concerns were voiced by MPs about China’s growing dominance over the electric vehicle (EV) and EV battery supply chain.
The Allied Gold deal comes following Prime Minister Mark Carney’s recent trip to Beijing in which Canada and China announced a number of memoranda of understanding on increased cooperation and collaboration on critical minerals, energy, forestry, law enforcement, and trade. Carney’s office said this is part of a “new strategic partnership” between Ottawa and Beijing.
On Jan. 16, Carney also said Canada will cut its 100 percent tariffs on Chinese-made EVs to 6.1 percent for up to 49,000 vehicles in the first year, rising to 70,000 per year within five years. In return, Ottawa said China has committed to slash its 100 percent tariffs on various Canadian agricultural products, cut around 85 percent tariffs on canola to 15 percent, and get rid of 25 percent anti-discrimination tariffs on various seafood products by March 1.
Last year, John Moolenaar (R-MI), chairman of the United States House Select Committee on Strategic Competition between the United States and the Chinese Communist Party, wrote in a letter to Morgan Stanley as it was underwriting the initial public offering of Zijin Gold International Company that the company “has a track record of human rights abuses.”
“Even a cursory look at reports about Zijin Mining shows the horrific track record of human rights abuses the company perpetrates across the globe. From Xinjiang to Serbia to Colombia, groups have identified that Zijin Mining operates as a chronic human rights abuser,” Moolenaar wrote.
Gold Hits Record High
The news of the Zijin-Allied deal comes Jan. 26 as gold hit a record high of more than $5,000, driven by geopolitical tensions and a weakening Canadian dollar.Gold is priced in U.S. dollars on the world market, and a softer U.S. dollar has helped support global demand by making bullion cheaper for buyers using other currencies, while a weaker Canadian dollar has pushed prices to record highs in Canada.
That has contributed to increased demand for the precious metal, alongside sustained buying by central banks, which view gold as a hedge against inflation, financial instability, and rising geopolitical risk as debt burdens grow across many developed economies. Gold has been steadily rising for the past three years and has experienced an 82 percent rise in the past 12 months.
Chinese investors own stakes in more than two dozen Canadian mining companies, including Ivanhoe Mines, Teck Resources, and First Quantum Minerals.
