China is poised to gain control of a key iron ore supply route in Africa as the country continues to expand its dominance over the continent’s natural resources.
The privately owned Hanlong Group intends to take over Sundance Resources, an Australian mining company, early next year in a A$1.4bn (£900m) deal, according to reports from Chinese state media.
The acquisition process is expected to start on Feb 26 and end on March 1 after the relevant documents are submitted to the Australian authorities.
Details of the timetable emerged following a drawn-out takeover process, which has seen deadlines repeatedly pushed back.
Hanlong made its first bid for Sundance back in July 2011, but falling demand for iron ore saw the miner announce in August that it had accepted a lower takeover offer from Hanlong,
The acquisition, should it complete to timetable, would hand Hanlong control of the Mbalam iron ore mine that straddles the West African countries of Cameroon and the Republic of Congo. The region is seen as a major source of iron ore that could reduce China’s dependence on Australia and Brazil.
The deal is also expected to give China more sway in international talks to set iron ore prices.
The acquisition comes as China is encouraging its companies to secure resource assets overseas to meet growing domestic demand.
At the start of this month, China took a major step into North Sea oil and gas production when one of the country’s leading energy companies sealed a £9.5bn takeover of the Canadian giant, Nexen (KSE: 005720.KS - news) .
Closing the Hanlong deal would cap a turbulent two years for Sundance Resources. Australia’s mining community was left stunned in June 2010 when the company lost its entire board in a plane crash near the Mbalam project. A new board was appointed before Hanlong’s first bid last year.
Hanlong already owns around 14pc of Sundance, which currently controls the Mbalam mine. The project is expected to produce 36m tonnes of iron ore, used in steel-making, each year.