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Zhaojin launches Golden Gateway JV to boost Chinese investment in Australia

SNL Image
From left: Western Australia mines minister Bill Johnston, Chinese Consul General Dong Zhihua, PCF Capital Group founder Liam Twigger, Zhaojin International Mining's Weng Zhanbin and Sun Xiduan at the Golden Gateway joint venture launch in Perth, Australia Aug. 12.
Source: PCF Capital

Zhaojin Mining Industry Co. Ltd. subsidiary Zhaojin International Mining Co., Ltd. has targeted Australia as its key overseas expansion platform by launching the Golden Gateway joint venture in Perth, Australia, Aug. 12 with corporate advisory PCF Capital Group Pty Ltd.

Perth-based PCF Managing Director and founder Liam Twigger told S&P Global Market Intelligence Aug. 13 the JV would firstly focus on Australian gold projects and companies for Zhaojin Mining as part of the Chinese group's plans to match its Chinese production with overseas production.

Secondly, PCF will also vet Australian companies and management teams in other commodities that need funding to Chinese groups through networks provided by Zhaojin.

Twigger, who negotiated the JV with Hong Kong-listed Zhaojin Mining in Shandong Province three months ago, said the Chinese group looked around the world for where it would focus its international expansion, but its preference is Australia due partly to time zone synergies particularly Perth.

He said China's appetite to secure commodities is still "insatiable" given its intent on maintaining growth and becoming less reliant on external economies. Zhaojin in particular has a mandate to become a million-ounce producer, Twigger added.

The JV is also part of Zhaojin Mining's plans to rise from its current ranking as China's fourth-largest gold producer, with 670,000 ounces per annum, to the top one or two, Twigger said.

"Nothing is off the table," Twigger said of what types of investments the JV could facilitate — from equity stakes to project and company-level acquisitions.

China has been largest market for Western Australia's merchandise exports since 2006.

The state's Asian Engagement Minister Peter Tinley said in an Aug. 12 statement that attracting foreign investment which helps create and support jobs in the resources sector is a key priority of the government's strategic engagement with Asia.

While there is a strong global demand for profitable gold mining operations less exposed to the fluctuations in worldwide economic growth and trade relations, Twigger said in an Aug. 12 statement that PCF has observed an increased appetite from Chinese mining companies to invest in the "right opportunities" Down Under.

However, he said there has been some hesitancy to transact due to a perceived lack by the prospective buyer of local market insight and the ability to carry out effective due diligence.

Zhaojin Mining Chairman Weng Zhanbin formalized the Golden Gateway JV at a signing ceremony in Perth Aug. 12 attended by Western Australian mines minister Bill Johnston and Dong Zhihua, the consul general of China's Consulate in Perth.