China's CIC to lend Canada's SouthGobi $300 million: sources

BEIJING/HONG KONG (Reuters) - China's sovereign wealth fund, China Investment Corp. (CIC), will lend Canada-listed mining group SouthGobi Energy Resources $300 million to fund mining projects, sources said on Friday.

The loan will allow SouthGobi to fund more projects ahead of its planned Hong Kong initial public offer and allow China to partner a company that has its main coal mine in Mongolia.
The agreement between the two is in line with China's push to invest in Canada's natural resources sector, an industry that the Chinese and other Asian countries are descending on in search of cheaply valued companies and access to metals, coal and oil.
Korea National Oil Corp's C$1.8 billion ($1.7 billion) bid for Harvest Energy Trust on Thursday is at least the fourth Asian deal involving a Canadian company since July.

CIC had earlier bought a $1.5 billion stake in Teck Resources, a top producer of zinc, copper and metallurgical coal.

SouthGobi, 80-percent owned by Ivanhoe Mines , is listed in Canada but focused on exploring and developing metallurgical and thermal coal deposits in Mongolia and Indonesia. SouthGobi's flagship coal mine is Ovoot Tolgoi, in Mongolia.

The loan from CIC will allow the company to fund infrastructure, more mines and coal processing projects, sources with direct knowledge of the deal said. The sources were not authorized to speak publicly about the agreement.

CIC's deal with SouthGobi will also grant China coveted access to Mongolia's natural resources and gives SouthGobi a powerful political ally in Beijing, providing the coal miner with clout and political leverage as it negotiates with Chinese coal customers.

The CIC-SouthGobi agreement could be announced as early as next week, according to the sources.

Reuters reported in June that SouthGobi plans to raise roughly $250 million through a Hong Kong initial public offering. The company hopes to complete the IPO by the first quarter of next year, one source said on Friday.

Macquarie Group is advising SouthGobi on the CIC loan, according to the source. The three companies were not immediately available for comment.

(Additional reporting by Chen Aizhu in BEIJING; Editing by Chris Lewis, Ken Wills and Valerie Lee)



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