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Chinese Mining Giant on US Forced Labour Watchlist Acquires Canadian Gold Miner
A Chinese mining conglomerate, whose parent company features on America's forced labour watchlist, has unveiled a major acquisition of a Canadian gold mining firm. The deal, valued at $4.2 billion (£3.07 billion), emerges shortly after Canadian Prime Minister Mark Carney's diplomatic visit to China, highlighting complex international trade dynamics.
Geopolitical Context and Acquisition Details
Zijin Gold International, a subsidiary of Zijin Mining Group, will assume control of Canada's Allied Gold's African mining operations through an all-cash transaction. This strategic move occurs as Zijin aggressively expands its global footprint, capitalising on soaring gold prices that have reached unprecedented levels.
The parent company, Zijin Mining Group, remains listed on the US administration's Uyghur Forced Labour Prevention Act Entity List. This designation prohibits goods associated with companies suspected of utilising forced labour involving China's Uyghur minority in Xinjiang from entering American markets.
Timing Amid Diplomatic Efforts
This acquisition announcement follows closely on the heels of Prime Minister Carney's recent trip to China, aimed at repairing strained bilateral relations. During his visit, both nations reached preliminary agreements to reduce tariffs on electric vehicles and canola, while pledging to alleviate ongoing trade tensions.
Canada has historically maintained a close alliance with the United States, both geographically and politically. However, Beijing perceives that President Donald Trump's economic and military policies toward various nations might gradually weaken this longstanding relationship.
Economic Implications and Market Response
Zijin Gold's shares surged by as much as 19 percent in Hong Kong trading following the deal's announcement, reaching a record high. The transaction represents one of the largest acquisitions of a Canadian-registered mining company by a Chinese investor.
The remarkable surge in gold prices has substantially enhanced profit margins and cash flows for mining companies, driving industry consolidation. Major producers increasingly seek to secure long-life assets and boost production through acquisitions rather than developing new mining sites from scratch.
Deal Structure and Conditions
Under the agreement's terms, Zijin will pay C$44 per share, representing approximately a 5.4 percent premium to Allied Gold's last closing stock price. US-listed shares of Allied experienced a nearly 4 percent increase during premarket trading.
The transaction includes specific termination clauses, requiring Allied to pay C$220 million (£106 million) to Zijin if the deal collapses under certain predefined conditions. Both companies anticipate completing the transaction by late April 2026.
Human Rights Allegations and International Response
The Chinese government, under President Xi Jinping, faces persistent allegations regarding the prosecution of Uyghurs and Hui Muslims over the past decade. Accusations include widespread human rights abuses and arbitrary detentions, which Beijing consistently denies, dismissing them as the "lie of the century."
United Nations reports indicate that China has detained over one million minority Muslims, predominantly ethnic Uyghurs, following intensified counter-terrorism policies implemented in spring 2017. In October 2024, Canada joined the United States, the United Kingdom, and twelve other nations in issuing a joint UN statement condemning alleged human rights violations in Xinjiang and Tibet.
Strategic Rationale and Industry Perspective
Allied Gold's Chief Executive Officer, Peter Marrone, emphasised that the deal delivers significant value for shareholders while showcasing the company's extensive portfolio of gold assets across Africa. Zijin enjoyed a robust debut on the Hong Kong stock exchange last year, benefiting from sustained bullion price rallies and a September fundraising boom.
This acquisition is expected to further strain relations between Washington and Ottawa, as Canada navigates its economic dependencies. With more than 75 percent of Canadian exports destined for the United States, Prime Minister Carney has established ambitious targets to reduce this reliance by doubling exports to other nations within the coming decade.
