May 17, 2020

Chinese Coal Giant Yanhzou Abandons Yancoal Takeover

2 min
Duralie Coal mine in Gloucester, operated by Yancoal
Major Chinese coal company Yanzhou has walked away from their offer to take over Australian company Yancoal. This decision comes after both a successful...

Major Chinese coal company Yanzhou has walked away from their offer to take over Australian company Yancoal. This decision comes after both a successful lobbying attempt to remove the conditions tied to the company, and the value of their deal falling well below their original proposal.

The Labor government had allowed Yanzhou to acquire Felix Resources in 2009, on the grounds that it be listed and headquartered via Yancoal, and also sell down its stake in the company below 70 percent.

The timeline extended in 2012, where Yanzhou was given an extra year to complete the sell down when it acquired Gloucester.

After intensive lobbying, Treasurer Joe Hockey allowed Yanzhou to cancel their 2009 selldown commitment. The official, approved decision reached held that Yanzhou hold a 78 percent stake in Yancoal, and then offer securities valued at $151 million for the other 22 percent of the company, based on the company’s share prices of last July. These terms were agreed to in December of 2013.

However, since then, the value of Yanzhou’s offer had fallen to less than $130 million. In a one-page statement issued at the end of May, Yanzhou announced it was abandoning the bid with no specific explanation.

In researching a reason, one does not have to look very far. China’s coal industry has been failing since the end of last year, and Yancoal is a lose-maker that is potentially facing a “red ink future”. And while China’s coal consumption increased by 2.6 percent in 2013, that’s only a third of the rate of growth in GDP.

Some believe that this deal has left a hole in Australia’s credibility on foreign investment regulation. However, the next deal that comes up will certainly be regarding much more carefully.

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Jun 29, 2021

Vale invests $150mn to extend life of Manitoba operations

battery metals
2 min
Vale’s $150mn investment in operations at Thompson, Manitoba will extend mine life by 10 years

Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.

Global energy transition is boosting the market for nickel

The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.

“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.

“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”

Vale continues drilling program at Manitoba

Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.

“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.

“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”

The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history.  Mining of the Thompson orebody began in 1961.

“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.

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