Beijing’s regulators are casting doubt over a $4 billion Chinese deal to take over a gold mining company in Mali, Africa’s third-largest gold producer, raising concerns about valuation and political risk.
The move comes as China’s National Development and Reform Commission reviews Zijin Gold International’s proposed acquisition of Allied Gold, with officials questioning whether the valuation is too high and whether exposure to Mali’s mining sector introduces unnecessary geopolitical risk.
The regulatory headwinds have cast uncertainty over what would be the Hong Kong-listed firm’s first major deal since its IPO last autumn.
The deal, agreed earlier this year, has already been viewed as a high-stakes bet on Africa’s gold industry at a time when bullion prices have surged to record levels, fuelling a wave of global mining mergers and acquisitions.
China’s National Development and Reform Commission has raised concerns over the valuation premium in the deal and the geopolitical risks tied to Allied’s operations in Mali, people familiar with the matter said.
The proposed acquisition, agreed in January at C$44 per share, was initially seen as a bold bet on Africa’s gold sector at a time when bullion prices surged above $5,500 per ounce. Prices have since eased to around $4,500/oz, cooling investor sentiment across the industry.
Mali risk factors weigh on investor sentiment
Allied’s key asset, the Sadiola mine, is located in Mali, a jurisdiction increasingly viewed as high-risk by global miners.
The country has faced violent attacks by separatist and jihadist groups, while its military government has detained foreign mining executives and renegotiated contracts with major operators including Barrick Gold and Resolute Mining.
Those developments have heightened concerns among regulators and investors about long-term operational stability in the country’s mining sector.
Meanwhile, Western mining companies continue to reduce exposure to higher-risk African jurisdictions, accelerating asset sales and portfolio restructuring. This retreat has created acquisition opportunities for Chinese miners, which are expanding overseas by targeting producing assets rather than greenfield developments.
Source: Africabusinessinsider