China Minmetals unit sets sight on global potash assets with bid for Australian miner

By Aaditya GovindRao

May 12 (Reuters) - A unit of state-owned China Minmetals plans to invest $300 million to take control of Highfield Resources HFR.AX, Yankuang Energy 600188.SS said on Monday, as part of Minmetals' push into potash projects in Canada and Spain.

In September, Australian potash miner Highfield said it would raise $220 million from Yankuang Energy and other parties, making the Chinese coal miner its majority shareholder.

However, if the deal with Minmetals-owned Qinghai Salt Lake Industry 000792.SZ goes through, Qinghai will become Highfield's largest shareholder.

The deal will give Qinghai access to Yankuang's Yancoal Canada operations, including its Southey potash project, alongside Highfields' construction-ready Muga Project in Spain.

Highfield Resources has signed letter of intent with Qinghai Salt Lake Industry, giving Qinghai the exclusive right to conduct due diligence until June 30, the company said in a statement on Tuesday.

Potash is a critical component in agricultural fertilisers, essential for food production. Qinghai, which controls the most potassium and lithium resources in China, will now conduct due diligence and audit the transaction, according to a filing with the Shenzhen stock exchange.

Qinghai and Minmetals, traditionally known for their mining operations focused on metals like copper and zinc, are jointly developing a 10 billion yuan ($1.39 billion) lithium and potassium production hub in northwestern China.

In April, Yankuang had secured approval from Australia's Foreign Investment Review Board for its investment in Highfield.

If a binding agreement is reached, Qinghai would also need to meet this requirement, alongside approvals from Spanish and Canadian foreign investment authorities for the deal.

($1 = 7.2022 Chinese yuan renminbi)