The USD 1.3 billion takeover of Australia’s Sundance Resources by China’s Hanglong Mining is closer being a reality as Hanglong has cleared one of the key parameter, clearing some key terms with the government of Cameroon over development of the Mbalam iron ore project.
To further secure their takeover bid of Sundance, Hanglong needs the approval of Australian Foreign Investment Review Board before the 30th of June, 2012, Cameroon news media reports. After that would come the toughest part, requiring Hanglong to line up funding from China Development Bank by August end.
Cameroon’s part in this entire scenario is actually where this whole situation originates. Hanglong’s primary interest in Sundance is, in fact, due to the Australian mining concern’s USD 4.7 billion Mbalam iron ore project situated on the border of Congo and Cameroon. Iron ore is a resource that China sorely needs a direct access to in order to reduce dependence on Brazil and Australian. However, the hiccup is that even in view of the Chinese government’s strong inclination to tapping new sources of iron ore in Africa, China Development Bank has so far failed to give its blessing—or funding, for that matter—to the AUD 1.34 billion bid by Hanglong.
Representatives of CDB, approached for comment, said that the bank was Cameroon and Congo to seal mining agreements.
Mr George Jones, the Chairman of Sundance Resources stated, “We now look forward to finalising the remaining elements of the (agreement) and paving the way for the people of the republics of Cameroon and Congo to reap the benefits of this world-class project.”
Sources within China, on the other hand, indicate that China Development Bank is being extremely conscious about financing or investing into large ventures involving a privately owned Chinese company in the current business scenario.
The good news for the deal is that diplomatic channels between Cameroon and China have been opened up to address this situation. Cameroon’s Prime Minister Philemon Yang has recently written to Chinese premier Wen Jiabao calling for China’s support on the deal and hence on the Mbalam project. While the Cameroon mining sector is a major force of development in general, the Mbalam iron ore project is particularly crucial to the Central African nation as the entire project also includes building a 510 kilometers long railway line and a deepwater port.