SouthGobi Resources expects Chalco to call off takeover bid

SouthGobi Resources (1878.HKG, SGQ.TSE), a Mongolian coal miner, said it expects Chinese state-controlled Chalco (2600.HKG) to remove its takeover offer of US$926 million due to government opposition, Reuters reported. The proposed takeover is supported by Turquoise Hill Resources (TRQ.TSE), SouthGobi’s majority shareholder, but it has met with opposition from the Mongolian government, which is wary of the growing Chinese presence in the mining sector. “The evidence I have before me seems highly unlikely that the bid is going to go forward. It’s 100% clear that Mongolia has made the deal impossible,” SouthGobi Chief Executive Alex Molyneux said. Chalco said this month that it decided to extend its previous offer to an additional 60% of the common shares of SouthGobi Resources, as the company requires more time to “engage with the Mongolian government.”