Chalco withdraws bid for coal supplier

Aluminum Corporation of China (Chalco; ACH:NYSE, 601600:SH, 2600:HKG), withdrew its bid for Mongolian coal supplier SouthGobi Resources Ltd (1878:HKG) almost two months after the expected closing date of the sale, Caixin reported. The Chinese company’s potential US$1 billion investment was initially delayed before the termination. The company blamed Mongolian regulatory hurdles in a project that was to allow Chalco to vertically integrate its coal, ore and aluminum businesses. Chalco signed a deal with SouthGobi’s majority shareholder Turquoise Hill Resources Ltd (TRQ:NYSE)(TRQ:TSE) for between 58% and 60% of shares at US$8.73 each, prior to the Mongolian government’s mid-May policy change that directly affected the acquisition. The breakdown of the deal caused a 71% fall in SouthGobi share prices, and Chalco and Turquoise Hill officials said that the opposition inside the Mongolian government had been building for weeks before they finally decided to pull the bid.