China’s CATL, Huayou eye 10% stakes in miner Jinchuan Intl -sources

A sign of the Chinese battery manufacturer Contemporary Amperex Technology Ltd (CATL) can be seen on its building in Ningde, Fujian province, China, 8 August 2018. Picture from August 8, 2018. REUTERS / Stringer

  • CATL Announces HK $ 2 Billion Offer for 9.9% of Jinchuan Intl Sources
  • Chinese cobalt miner says he’s had talks about issuing new shares
  • Says no contact with third parties on the matter since early August

HONG KONG, Aug 26 (Reuters) – Contemporary Amperex Technology Co Ltd (CATL) (300750.SZ) and Zhejiang Huayou Cobalt are each in talks to purchase around 10% stakes in the Chinese mining company Jinchuan Group International Resources Co (2362.HK) Valued at HK $ 2 billion ($ 257 million), sources told Reuters on Thursday.

The leading Chinese battery manufacturer CATL wants to support the supply of raw materials such as cobalt, the prices of which have risen sharply this year.

The company has made an offer to buy 9.9% of Jinchuan International, which would estimate the stake at approximately HK $ 2 billion and secure at least 3,000 tons of cobalt annually through the deal, said two sources with direct knowledge of the matter .

CATL denied buying such a stake.

Jinchuan International said in a filing that it was in “preliminary discussions with independent third parties” about the possible issue of new shares, without naming the parties. It called the talks “premature” and said there had been no contact on the matter since around August 2nd.

The CATL offering represents a premium of approximately 40% on Jinchuan International’s average share price of HK $ 1.14 last month and would value the company at approximately HK $ 20.2 billion.

Sources said CATL wanted to buy almost 20% and ingest twice as much cobalt, but that was rejected by Jinchuan International, the Hong Kong-listed branch of the state-owned metal producer Jinchuan Group, which mines cobalt in the Democratic Republic of the Congo (DRC.) .

Standard Chartered (STAN.L) is the main bank advising on the transaction, the sources said. The bank did not respond immediately to a request for comment.

One of the sources told Reuters that Huayou (603799.SS), already one of the largest cobalt producers in the world, was in separate talks for a 9.9% stake in Jinchuan International.

A Huayou spokesman said this was not the case.

Jinchuan International’s shares rose as much as 90.5% on Thursday to HK $ 2.00 (0.2569), their highest level since March 2018 after Bloomberg News reported that CATL was in initial talks to buy a stake of around 10%.

The company produced 4,158 tons of cobalt from the Ruashi mine in the Democratic Republic of the Congo last year. The goal is to grow production to 13,000 tons per year by 2023, the two sources said, with one adding that supplies from another DRC mine, which CATL has invested in, won’t be available until 2026.

In April, a CATL entity agreed to pay $ 137.5 million for a stake in China Molybdenum Co (CMOC). (603993.SS) Kisanfu copper-cobalt mine.

CMOC has not yet announced a timeframe for production in Kisanfu.

“We see CATL’s potential further expansion into cobalt mining as evidence of solid cobalt demand,” even as low and cobalt-free batteries continue to grow in popularity, Daiwa Capital Markets said in a press release.

($ 1 = 7.7861 Hong Kong dollars)

Reporting by Julie Zhu in Hong Kong, additional reporting by Bhargav Acharya in Bengaluru, Tom Daly and Shivani Singh; Editing by Tomasz Janowski and Jason Neely

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