China Moly agreed to purchase the Tengke Fungurume cobalt and copper mine from Freeport McMoran in 2016 with BHR acting a co-investor. China Moly purchased 56% with BHR purchasing an additional 24%. Despite the appearances of an international free market arm’s length transaction, this is effectively a state backed investment. The major shareholder in China Moly is a beneficial owner for the State-Owned Assets Supervision and Administration Commission of the State Council of China (SASAC). This follows the pattern the BHR is created with central SOE involvement and partners with state owned or linked entities.
There are a few unique facets of this specific investment. China Moly effectively guaranteed the investment for BHR engaging in uniquely non-market behavior. The deal between China Moly and BHR was a complicated transaction that gave China Moly a call option and BHR a put option. 29 This effectively guaranteed a specified rate of return to BHR. Adding to this, China Moly guaranteed a loan up to $700 million received by BHR from China Construction Bank.30 The agreement goes even further to compensate BHR investors if BHR cannot raise the required capital for investment, even with China Moly assets guaranteeing the transaction, “compensate(ing) BHR for losses it suffers as a result…”. Given the China Moly guaranteed rate of return to BHR and the guarantee of capital for BHR to fund its share of the investment, this is cannot be considered a market-based transaction. BHR provided no value to the transaction and the special purpose vehicle in this transaction was subsequently considered a subsidiary of China Moly in accounting records.
BHR eventually secured investors for their share of capital. The specific investors brought in by BHR however are also notable.31 Two of the specific investors were linked to Chinese state-owned funds investing in Africa. Another investor, Design Time Limited, remains an unknown entity beyond its name due to incorporating in a jurisdiction with a company known for protecting the anonymity of highpowered Chinese individuals and institutions. It is possible to say however, based upon their other holdings that Design Time is a very powerful entity in their own right whoever owns them. Design Time is listed as an equal owner to China Construction Bank in companies owned by the centrally owned Central Huijin Investment. 32 Central Huijin is the domestically focused subsidiary of the China Investment Corporation owned and overseen by the Ministry of Finance. Whoever owns Design Time Limited is without question a major politically and financially important institution or individual. The final company, named as CNBC (Hong Kong) Investment Limited does not actually appear anywhere in Hong Kong corporate records.
China Moly purchased the outstanding 24% from BHR less than two years after entering into this partnership. The two-year timeline is notable because in the bank loan agreement BHR reached with China Construction Bank, the China Moly guarantee only extended two years. Since this time, China Moly has declared the Tengke Fungurume mine unprofitable at current prices that began sliding when they entered into the 2019 purchase agreement and have continued since. Based upon existing evidence, BHR involvement seems less about value creation and generating investment returns for preferred individuals.
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FBI has had the laptop for over a year already and didn't say anything. Remember when Trump got impeached for congratulating the new President of the Ukraine?
