SHANGHAI, Dec. 24 -- Zijin Mining Group Co., China's largest gold producer, will buy $200 million of convertible bonds issued by Glencore International AG to gain investment opportunities with the world's biggest commodity trader.
"As a result of the transaction, the company has an opportunity to make an overseas investment in mining assets through investment in Glencore," the Fujian province-based company said in a filing to the Hong Kong stock exchange today.
The investment, along with Zijin's purchase of Indophil Resources NL, underscores the Chinese company's ambitions to increase overseas investment before asset prices soar. Glencore yesterday said it sold as much as $2.2 billion of the bonds, in what may be the first step toward an initial public offering.
Zijin plans to "form a long-term strategic partnership with Glencore through the subscription," it said in a filing to the Shanghai stock exchange.
The company, also the nation's third-biggest copper producer, rose 1.1 percent to close at HK$7.45 yesterday in Hong Kong. The stock has gained 59 percent this year, beating a 48 percent increase in the benchmark Hang Seng Index.
Zijin agreed this month to pay A$545 million ($480 million) for Melbourne-based Indophil Resources to gain a stake in Southeast Asia's largest untapped copper and gold deposit.
The company, which has spent $300 million in the past five years on eight overseas projects, is planning to increase investment because the timing is "still good", Vice Chairman Lan Fusheng said Oct. 22. Shareholders approved a 7.5 billion yuan ($1 billion) debt sale on Nov. 6.
The Glencore bonds, carrying an annual interest rate of 5 percent, are due 2014, Zijin said. The purchase, made by a unit, is subject to approval from the Chinese government, it said.
Other investors who bought the bonds included BlackRock Inc. and the Government of Singapore Investment Corp.
China, the world's biggest metal consumer, has been pushing its companies to buy assets overseas to guarantee supply and limit exposure to rising commodity prices.