Mongolia's wariness over Chalco's SouthGobi buy sparks resource nationalism fears

May 03, 2012 | 06:28 AM |

Threats made by Mongolia to suspend the mining and exploration activities of coking coal producer SouthGobi, after the miner announced the sale of a majority stake to a Chinese state-owned aluminium company, have cast doubts over the country’s attractiveness for investment in emerging resources. In early April, Aluminum Corp of China (Chalco) announced its intention to buy as much as 60% of Toronto-listed SouthGobi. Two weeks later, the Mineral Resources Authority of Mongolia (MRAM) said in a press conference in Ulaanbaatar that it wanted to suspend exploration and mining activity on certain SouthGobi licences. This would allow Mongolia’s government to review the implications of Chalco’s takeover bid, MRAM said. But SouthGobi has not received any official notification to suspend mining activities and its mines “are still operating, running and producing coal”, vp Dave Bartel told Metal Bulletin on April 24. International tension The MRAM announcement itself prompted discussions in the industry about whether it pointed to a wider move by the Mongolian government to maintain ownership of its resources, or was another example of the tension between the land-locked country and....