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Sovereign wealth fund wants foreign resources

(China Daily)
Updated: 2009-09-16 08:05

China Investment Corporation (CIC), the nation's sovereign wealth fund, is in a series of talks with foreign resource firms with a view to possible investments.

One of them is a Mongolian iron-ore miner that is being sounded out for a possible $300 million investment in which CIC would buy convertible bonds in Hong Kong Lung Ming Investment Holdings Ltd.

The Hong Kong-based investment firm, which is to go public next year, owns a 53 percent stake in the operator of the Eruu Gol iron-ore project in Mongolia, the Wall Street Journal reported yesterday.

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Temasek Holdings Pte Ltd, Singapore's sovereign fund manager, and private-equity firm Hopu Investment Management Co, invested a combined $300 million in Lung Ming in 2008 by buying the company's convertible bonds. The funds were used to develop its iron mines in Mongolia.

Despite abundant resources in Mongolia, including iron ore, copper and gold, the country struggled to attract foreign investment because of uncertain policies.

The talk came after recent news that CIC was interested in the $1.9 billion bonds and warrants issues of Indonesia's biggest coal miner PT Bumi Resources Tbk. The senior management of Bumi, however, denied the possibility of any investment from CIC.

Staff at China's $200 billion-backed sovereign fund are also in talks over taking a minority stake in AES Corp, a US power-plant developer.

Chinese companies have stepped up overseas investment. According to data provider Dealogic, Chinese firms have invested $16.7 billion to acquire stakes in steel companies and miners, up from $3.6 billion in 2007.