Zijin's Canada gold rush crosses China's red line

Zijin Gold International

31/07/2026 07:15

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Ka Sing Chan
HONG KONG, July 31 (Reuters Breakingviews) - Big mining deals struck near the top of a cycle rarely age well. Beijing appears to think so, too. Zijin Gold International 2259.HK has dropped a $4 billion takeover of Canada's Allied Gold AAUC.TO after regulators' concerns over capital discipline and geopolitical risk trumped the government's global ambitions in resources and finance. It's a timely warning for other miners hunting for foreign acquisitions in a commodity bull market.
The takeover was originally slated to close by May 29 but was delayed after Zijin struggled to secure all the necessary regulatory approvals. The miner finally pulled the plug on Thursday after concluding there was “no reasonable likelihood” that all conditions to seal the deal would be met. 
The transaction got the backing of shareholders as well as regulators in Canada and several African jurisdictions. But it stalled in China: the National Development and Reform Commission (NDRC) questioned whether the acquisition's risks justified its price. Allied Gold's exposure in Mali was a particular concern. The country faces a worsening security crisis,and the embattled military government has arrested several foreign mining executives in recent years while pushing to renegotiate contracts.
Capital discipline may be a growing concern, too. The Allied takeover would have exhausted Zijin Gold's $3.6 billion cash pile, mostly amassed after its Hong Kong listing in September. Meanwhile, parent company Zijin Mining 601899.SS agreed in May to spend another $2.6 billion to take control of domestic rival Chifeng Jilong. The group has been China's most acquisitive, advancing Beijing's push to secure strategic resources from copper to lithium to gold. The yellow metal has gained particular importance as central banks diversify reserves away from dollar assets.
But official backing is no longer unconditional for resources deals. State media reported in June plans for a new state-backed company to coordinate overseas mining investments and manage geopolitical risks, while the NDRC is assuming a larger role in vetting major outbound acquisitions.
Yet Zijin is not walking away from Allied entirely. It will pay about $295 million for a 9.2% stake in the Africa-focused miner. Keeping a foothold while abandoning full control preserves relationships and future supply at a fraction of the cost. Buying influence, not the whole company, may become the new playbook for Chinese miners abroad.
     
CONTEXT NEWS
Zijin Gold International has dropped a planned $4 billion takeover of Canadian miner Allied Gold, the Chinese miner announced on July 29. The firm has already delayed the closing of the deal once from its original deadline of May 29.  

(Editing by Hudson Lockett; Production by Ujjaini Dutta)
((For previous columns by the author, Reuters customers can click on CHAN/ KaSing.Chan@thomsonreuters.com))