the 60% saga: update on Shenghe in Greenland

Two separate sources say Greenland Minerals and Energy, the Australian company that has agreed to sell a stake in a Greenland uranium and rare earth project to Shenghe 盛和 Resources, now denies the agreement includes an option for Shenghe to increase its interest to a controlling one once the project enters the development stage.

An option to acquire a controlling stake (up to 60%) in the Kvanefjeld (Kuannersuit in Greenlandic) project is discussed in clear terms in a Shenghe Shanghai Stock Exchange disclosure, as I was seemingly the first English-language source to report. The language suggests GME is not bound to sell Shenghe such a large share, should they ask for it.

The purchase option should be good news for GME, so it’s hard to see why they would deny it.

It’s been known for ever that some sort of more or less Chinese state-connected involvement would eventually begin in Kvanefjeld. GME had long had a non-binding agreement with a unit of China Nonferrous (中色); as explained in some detail in my post from last week, Shenghe’s main shareholders are also mostly state organs.

This information has now reached the mainstream media. Various experts quoted by Politiken draw (geo)political implications of the deal. Rear Admiral (kontreadmiral) Nils Wang, an Arctic expert with the Danish Defence College, expects the deal to attract attention in the US: “It’s very easy to interpret this not just as the classic Chinese-style long-term thinking, but also as two [the other one being General Nice (俊安集团) purchase of Isua] of China’s slowly creating for themselves in Greenland the same kind of soft-power influence they already have in Iceland”. In Greenland, Aaja Chemnitz Larsen of the opposition party Inuit Ataqatigiit (IA), talks of “a need to know how big an influence China can get over the project”, on which she intends to query the Greenlandic and Danish governments. So that’s already a Greenlandic politician and a Danish kontreadmiral for whom the 60% number and Shenghe’s state connections could be interesting data points.

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new Chinese investor in Greenland uranium+rare earth project

Chinese rare earth miner Shenghe Resources (盛和资源) has agreed to buy a 12.51% stake in ASX-traded Greenland Minerals and Energy (GME), the company behind the Kvanefjeld (Kuannersuit) uranium+REE project in Greenland. That will already make Shenghe Resources, through a subsidiary, the largest individual shareholder in GME. The agreement gives Shenghe the option to increase its participation up to a 60% stake once the project enters the development stage, Shanghai Stock Exchange disclosures show. The deal is subject to the approval of GME shareholders, Australia’s Foreign Investment Review Board and Chinese authorities, with a late-November deadline. Shenghe’s stake will be owned by it subsidiary Leshan Shenghe 乐山盛和.

At A$.037, the price agreed is less than the A$.06 GME shares closed at when they suspended trading two days ago, but an improvement over the A$.02 it hit last December, when talks with Shenghe reportedly started. Indeed, GME’s recent rise might be what triggered Shenghe to close the deal, rather than wait for the Kvanefjeld project to get a production permit from the Greenlandic authorities.

Chengdu-based Shenghe (listed in Shanghai) is a major consolidated rare earths company. More than a quarter of its shares are owned by state institutions. Its biggest shareholder (~20%) is the Chengdu Institute of Multipurpose Utilisation of Mineral Resources (中国地调局成都综合所, IMUMR), a geological research institution ultimately subordinated to the Ministry of Land and Resources. State ownership also occurs at the provincial level, through the Sichuan Geological and Mineral Resources Company (四川省地质矿产公司), who have conducted exploration activities in Laos and Mozambique. But the name to remember is IMUMR, the central-government majority shareholder. Shenghe’s current identity goes back to a reverse takeover in 2013; its predecessor (i.e. what was reversely taken over) is precisely Leshan Shenghe, established in December 2001 (the IMUMR stake goes back to at least ’02, the Sichuan gov’t company’s to ’04).

Shenghe’s biggest private shareholder is Wang Quangen 王全根, but he isn’t unconnected to the IMUMR. He worked at the Institute for 26 years, the last nine of which overlapped with functions at Shenghe. That is, while he worked as an engineer at a state research institution, he went on to own, together with his wife, a significant share in a large Shanghai-listed company closely connected to the Institute. How he became so rich is, says a Xinhua report, an “enigma“. Another non-state shareholder in Shenghe is Sichuan Giant Star Group (四川巨星集团). Shenghe is chaired by Hu Zesong 胡泽松, vice Party secretary at the Institute.

The latest arrival to Greenland’s mining ecosystem is thus a company intimately connected to a Sichuan-based geological research institution controlled by the central government.

Shenghe has been looking for rare earth resources abroad recently, including a purchasing agreement with Tantalus for its Madagascar production and plans to buy 90% of Vietnam Rare Earths.

phish in a barrel

Over at Language Log, a language blog I’ve been known to parasitise, Geoffrey K. Pullum reports receiving an email, allegedly from the Warren Buffett Foundation, offering him a million-dollar donation. If that generosity wasn’t remarkable enough, Pullum notices that the email came from Kazakhstan, not the first place you’d expect Buffet’s foundation to be based in.

The phisher’s email address isn’t just any Kazakhstan email address. It’s priem_zhgpz@cnpc-amg.kz, listed as a contact at CNPC-Aktobemunaygaz, a Kazakhstan company controlled by CNPC 中石油. Indeed, the username priem_zhgpz surely stands for приём[ная] ‘reception’ Ж[анажольский нефте]г[азо]п[ерерабатывающий] з[авод] ‘Zhanazhol oil and gas refinery’. CNPC is one of the ‘Three Barrels of Oil’ (三桶油), China’s state-owned oil majors; another Barrel, CNOOC (中海油) makes frequent appearances in this blog.

Either the address has been usurped by the Phorces of Evil, or CNPC’s riches aren’t trickling down to their staff at Zhanazhol, forcing them to do some phishing on the side.

[An update to Pullum’s post mentions the CNPC connection, which I wasn’t the only person to spot.]

[Hat tip to Victor Mair.]