A unit of state-owned China Minmetals plans to invest $300 million to take control of Australian potash miner Highfield Resources, aiming to expand its reach into potash projects in Canada and Spain, coal miner Yankuang Energy said on Monday.
In September, Highfield Resources had said it would raise $220 million from Yankuang Energy and other parties, a deal that would make the Chinese coal miner its majority shareholder.
However, if completed, the non-binding agreement between Minmetals-owned Qinghai Salt Lake Industry, Yankuang and Highfield’s current largest shareholder, EMR Capital, would result in Qinghai gaining control of Highfield instead.
Qinghai would also acquire Yankuang’s Yancoal Canada operations, including its Southey potash project alongside Highfields’ construction-ready Muga project in Spain with this deal.
Potash is a critical component in agricultural fertilizers, essential for food production. Qinghai Salt Lake Industry controls the most potassium and lithium resources in China.
Qinghai and Minmetals, traditionally known for their mining operations focused on metals like copper and zinc, are jointly developing a 10 billion yuan ($1.39 billion) lithium and potassium production hub in northwestern China.
Qinghai Salt Lake Industry will now conduct due diligence and audit the transaction, according to a filing with the Shenzhen stock exchange.
In April, Yankuang had secured approval from Australia’s Foreign Investment Review Board for its investment in Highfield.
If a binding agreement is reached, Qinghai would also need to meet this requirement, alongside approvals from Spanish and Canadian foreign investment authorities for the deal.
Highfield Resources did not immediately respond to a Reuters request for comment.
($1 = 7.2022 Chinese yuan renminbi)
(By Aaditya Govind Rao, Violet Li and Beijing Newsroom; Editing by Tasim Zahid)
