September 27, 2023

DealBook: Minmetals Withdraws Equinox Bid After Barrick Offer

Andrew Michelmore, Minmetals Resources' /” /span class=YM Yik/European Pressphoto Agency Andrew Michelmore, Minmetals Resources’ C.E.O.

Minmetals Resources, the state-controlled Chinese mining company that made an unsolicited bid for Equinox Minerals this month, said on Tuesday that it had dropped its offer after being outbid by the Barrick Gold Corporation.

On Monday, Barrick Gold made a friendly $7.7 billion bid (7.3 billion Canadian dollars), which was approved by the Equinox board. The deal is expected to be completed by early June. Barrick Gold’s offer of 8.15 Canadian dollars was about 16 percent higher than Minmetals bid of 7 Canadian dollars a share.

“Competing with Barrick at these prices would, in our view, be value destructive for M.M.R.’s shareholders,” Andrew Michelmore, head of Minmetals, said in a statement released in Hong Kong. “The price offered by Barrick is above our most optimistic assessment of value.”

The Minmetals decision demonstrates once more how averse Chinese companies can be to entering bidding wars, as they seek out high value while trying to avoid political obstacles.

The company’s unsolicited bid was already considered unusual, as other Chinese companies have made a point of forging partnerships through joint ventures, or buying minority stakes on friendly terms.

Minmetals still owns about 4.2 percent of Equinox, which owns the Lumwana copper mine in Zambia, as well as the largest deposit of copper in Saudi Arabia.

China and its state-owned companies are actively seeking new supplies of copper in order to keep building infrastructure in the rapidly growing country. Economic development there and in India, if sustained, is likely to keep copper prices high in the coming years, analysts have said.

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