Zijin Mining Group Co, China's largest gold producer, will buy $200 million of convertible bonds issued by Glencore International AG to gain investment opportunities with the world's biggest commodity trader.
"As a result of the transaction, the company has an opportunity to make an overseas investment in mining assets through investment in Glencore," the Fujian province-based company said in a filing to the Hong Kong stock exchange yesterday.
The investment, along with Zijin's purchase of Indophil Resources NL, underscores the Chinese company's plan to increase overseas investment before asset prices soar. Glencore yesterday said it sold as much as $2.2 billion of the bonds, in what may be the first step toward an initial public offering.
Zijin plans to "form a long-term strategic partnership with Glencore through the subscription," the company said in a filing to the Shanghai Stock Exchange yesterday.
The company, also the nation's third biggest copper producer, gained 4.7 percent to 9.65 yuan in Shanghai yesterday.
Zijin's shares in Hong Kong have gained 59 percent this year, beating a 48 percent increase in the benchmark Hang Seng Index.
Buying resources
Zijin agreed this month to pay A$545 million ($480 million) for Melbourne-based Indophil Resources to gain a stake in Southeast Asia's largest untapped copper and gold deposit.
The company, which has spent $300 million in the past five years on eight overseas projects, is planning to increase investment because the timing is "still good", Vice-Chairman Lan Fusheng said on Oct 22. Shareholders approved a 7.5 billion yuan ($1 billion) debt sale on Nov 6.
The Glencore bonds, carrying an annual interest rate of 5 percent, are due 2014, Zijin said. The purchase, made by a Zijin unit, is subject to approval from the Chinese government, it said. Other investors who bought the bonds included BlackRock Inc and the Government of Singapore Investment Corp.
