JOHANNESBURG (Reuters) - South Africa and Zambia have approved the $1.1 billion bid by China’s Jinchuan Group for copper and cobalt producer Metorex, bringing closer prospects for the deal to be finalised by November.
With approval from China still awaited, Metorex said on Tuesday that South Africa’s Competition Commission and Zambia’s Competition and Consumer Protection Commission have both backed the acquisition.
Jinchuan’s 9.1 billion rand bid in July trumped an offer by Brazilian giant Vale.
Metorex said it had also received consent from Zambia’s ZCCM Investments Holdings and Democratic Republic of Congo’s Gecamines, which have shares in the company’s operations.
It said it had yet to secure approval from Zambia’s finance ministry and Chinese authorities but expected the transaction to close in November.
Some analysts have said the sharply falling copper price may affect Jinchuan’s appetite for the bid but UBS said in a note the fundamentals for the deal were still strong.
Benchmark copper on the London Metal Exchange traded at $6,925.50 at 1504 GMT, down from Monday’s close of $6,990.
“We believe this is a strategic purchase for China. Jinchuan will use Metorex as a platform to expand operations in Africa,” UBS said.
Analysts said the deal is unlikely to be hit by a recent change of government in Zambia, Africa’s biggest copper producer, despite new president Michael Sata’s anti-Chinese rhetoric during his election campaign.
Sata has toned down his anti-China stance since being elected and met Beijing’s ambassador on his first working day in another sign that he is prepared to work with Chinese firms that have poured more than $2 billion into developing the mining sector.
UBS said Metorex’s operations in Zambia account for only around 2 percent of its copper output.
The company’s shares closed up 0.13 percent at 7.85 rand, compared with a 2.34 percent fall in the broader All-share index.
The miner will be delisted from the Johannesburg Stock Exchange after the deal is completed.