London, 3 September (Argus) — Chinese aluminium producer Chalco has dropped its $926mn takeover bid for a majority stake in Mongolian miner SouthGobi Resources following lengthy delays in the government approval process.

Chalco and Turquoise Hill Resources, which owns a 58pc stake in SouthGobi, said the difficulty of obtaining regulatory approvals was behind the failure of the bid.

“After careful consideration, both Turquoise Hill and Chalco have concluded that the proposed transaction has minimal prospect of obtaining the necessary regulatory approvals within an acceptable timeframe,” Turquoise Resources, formerly Ivanhoe Mines, said.

An initial deadline had been set for July, but Chalco then said it had been forced to push the date back by 30 days until early August before a third deadline was set for 3 September.

Mongolia's mineral resources authority suspended SouthGobi's licence to mine its Ovoot Tolgoi site in April following the takeover bid by Chalco amid concerns over the growing Chinese presence in the sector. Mongolian authorities passed new legislation in May that limits foreign ownership in its key industries like mining to 49pc unless the buyer obtains prior government approval.

SouthGobi owns three coal ventures in Mongolia close to the Chinese border — the Ovoot Tolgoi mine and two development projects, the Soumber deposit and the Ovoot Tolgoi underground deposit.

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