CITIC Metal Co., a major player in the global commodities trading sector, has announced plans to sell up to 2% of its holdings in Ivanhoe Mines, a notable mining company listed on the Toronto Stock Exchange (TSX: IVN). This potential sale, which could occur through public trades, private block trades, or a combination of both, represents a significant move by CITIC, currently the largest shareholder of Ivanhoe Mines.
As detailed in a press release distributed via the Shanghai Stock Exchange, CITIC Metal has received the green light from its board to potentially sell as many as 25,390,428 shares, translating to about 2% of Ivanhoe’s outstanding share capital. This decision is pending further approval from shareholders, with an important meeting scheduled for June 11 to discuss and possibly ratify this divestment strategy.
If the plan proceeds and CITIC sells the maximum allowable shares, its remaining stake in Ivanhoe will decrease to approximately 289.3 million shares, representing 22.78% of the company’s shareholding. This reduction from its current holding of 314.7 million shares, or 24.78% of the outstanding Class A shares, will slightly alter the balance of power among Ivanhoe’s major stakeholders. Zijin Mining Group, another Chinese entity and the second-largest shareholder, currently holds around 13% of Ivanhoe’s shares.
This strategic decision by CITIC comes amid increased scrutiny by the Canadian government on foreign investments, particularly from China, into Canada’s critical minerals sector. Over the past year, the government has heightened its surveillance measures and even mandated that three Chinese investors divest their stakes in Canadian mining enterprises. Additionally, a proposed investment by Zijin Mining in Solaris Resources was halted following a security review by Canadian authorities.
The backdrop to this development is Ivanhoe Mines’ significant role in the mining industry, especially through its joint venture with Zijin in the Kamoa-Kakula copper complex located in the Democratic Republic of Congo. This site, which started commercial production in 2021, is on track to become one of the world’s top three copper producers. With its final phase of development underway, Kamoa-Kakula is expected to reach peak annual production of 700,000 tonnes of copper.
CITIC’s decision to reduce its stake in Ivanhoe Mines could have various implications. Financially, it adjusts CITIC’s investment portfolio and potentially reallocates resources to other ventures. Strategically, it reflects the ongoing reevaluation of Chinese investments in foreign critical sectors amidst geopolitical tensions and economic uncertainties.
