Zijin's Strategic Move: The Race to Acquire Barrick's Tongon Gold Mine
In a significant development for the global mining industry, China's Zijin Mining has emerged as the leading contender to acquire Barrick Gold's Tongon mine in northern Ivory Coast. This potential acquisition, valued between $300-500 million, represents a strategic pivot for both companies and highlights the ongoing consolidation in the global gold mining sector.
The Strategic Sale Overview
Barrick Gold, one of the world's largest gold mining companies, has appointed TD Securities (Canada) and Treadstone Resource Partners (Australia) as advisors for the sale of its Tongon gold mine. Industry sources indicate that the mine could fetch between $300-500 million, reflecting its current production capacity and strategic value.
The Tongon mine remains an active production asset, yielding approximately 148,000 ounces of gold in 2024—representing roughly $504 million in value at current market prices. This production level demonstrates the mine's ongoing viability despite its projected limited lifespan.
Why Barrick is Divesting Tongon
Barrick's decision to sell Tongon aligns with its broader corporate strategy of focusing on high-margin, long-life assets while increasing its exposure to copper and strategic operations in Africa and the Middle East. The company has been systematically reshaping its portfolio over recent years.
The Tongon mine, despite its current production levels, is expected to enter care and maintenance by 2027 due to declining resources and ore grade challenges. This timeline makes it a non-core asset within Barrick's long-term vision.
This divestiture follows Barrick's other strategic moves, including:
- The $1 billion sale of its stake in Alaska's Donlin gold project
- Exit from the historic Hemlo mine in Canada
- Increased focus on tier-one assets with longer production horizons
For Barrick, this represents a calculated pivot away from assets approaching the end of their productive life in favor of operations with multi-decade potential.
Who is Leading the Acquisition Race?
Zijin Mining's Competitive Advantage
Zijin Mining has positioned itself as the front-runner in the Tongon acquisition race, leveraging substantial financial resources and an aggressive Zijin global expansion strategy. As one of China's largest gold and copper producers, Zijin has demonstrated a pattern of strategic acquisitions across multiple continents.
The company's recent expansion activities include:
- Acquiring a 9.9% stake in Canada's Montage Gold (which is developing Ivory Coast's Koney gold project) in July 2024
- Completing a $1 billion acquisition of Newmont's Akyem gold mine in Ghana in October 2024
- Securing mining assets across South America, Central Asia, and expanding its African footprint
This targeted approach to African gold assets suggests Zijin sees strategic value in establishing regional mining clusters, potentially creating operational synergies between Tongon and other nearby assets.
Other Potential Bidders
While Zijin appears to be leading the race, an unnamed local Ivorian company reportedly remains in contention according to industry sources. This competition introduces an interesting dynamic, particularly as the Ivorian government is said to prefer a partnership approach for the acquisition.
The difference in acquisition strategies is notable:
- Zijin appears to favor a standalone acquisition
- The Ivorian government reportedly prefers a partnership model
- The unnamed local company may align better with government preferences
The final decision on the winning bidder is expected later this month, pending necessary regulatory approvals from Ivorian authorities.
What Makes Tongon an Attractive Asset?
Mine Production and Valuation
While industry sources value Tongon at approximately $300 million, Zijin is reportedly prepared to offer significantly more—potentially up to $500 million—to secure the asset. This premium valuation reflects both strategic considerations and Zijin's aggressive expansion goals.
The mine's 2024 production of 148,000 gold ounces demonstrates its continued operational viability. Furthermore, its strategic location in northern Ivory Coast provides a valuable regional presence for any acquirer looking to establish or expand their West African mining portfolio.
Ownership Structure
The current ownership structure of Tongon presents unique considerations for any acquisition:
- Barrick holds an 89.7% stake in the operation
- The Ivorian government maintains a 10% ownership stake
- Local investors hold the remaining 0.3% of the mine
This mixed ownership structure means any acquisition would need to address multiple stakeholder interests, potentially complicating negotiations. The government's preference for a partnership model adds another layer of complexity to the transaction.
How Does This Fit into China's African Mining Strategy?
China's Growing Presence in African Mining
Zijin's pursuit of Tongon represents a continuation of China's broader resource acquisition strategy across Africa. Chinese state-owned enterprises have invested over $50 billion in African mining projects since 2010, establishing a significant presence across the continent.
This strategic focus encompasses critical minerals including:
- Gold reserves in Ghana, Tanzania, and now potentially Ivory Coast
- Copper assets in Zambia and the Democratic Republic of Congo
- Cobalt extraction operations central to battery technology
- Bauxite mining in Guinea
The pattern reflects China's long-term resource security strategy, securing access to critical minerals while expanding its geopolitical influence across the African continent.
Regional Mining Challenges
The acquisition comes amid significant regional challenges for mining operations in West Africa. Barrick recently suspended activities at its Loulo-Gounkoto complex in neighboring Mali after the military government blocked exports, detained staff, and seized gold in a mining code dispute.
Recent developments underscore the volatility:
- A military helicopter reportedly airlifted gold from the Loulo-Gounkoto site earlier this month
- Mali's government has taken an increasingly assertive stance toward foreign mining operations
- Regional political instability creates both risks and opportunities for strategic acquisitions
These challenges highlight the complex operating environment in West Africa, where political considerations can dramatically impact mining operations and asset valuations.
What Are the Potential Outcomes of This Deal?
Deal Timeline and Regulatory Considerations
While a final decision on the winning bidder is expected later this month, several factors could influence the timeline:
- Regulatory approval from Ivorian authorities remains a critical hurdle
- The government's preference for partnership structures may necessitate negotiation
- Competing bids could extend the process
- Regional political considerations may factor into approval decisions
The transaction could potentially be delayed or restructured depending on these negotiations, particularly if the Ivorian government pushes strongly for its preferred partnership model.
Strategic Implications for the Gold Mining Sector
This potential acquisition carries several important implications for the broader gold mining industry:
- Continued consolidation – Following other major gold M&A activity and acquisitions
- Shifting ownership patterns – With Chinese companies expanding their gold mining portfolios
- Evolving West African dynamics – As governments take more assertive stances toward foreign miners
- Strategic pivots by major miners – Barrick's move away from certain assets while Chinese firms expand
The deal may signal changing dynamics in West African gold mining ownership, potentially foreshadowing similar transactions as major Western mining companies reassess their portfolios.
Future Prospects for Tongon Under New Ownership
Extending Mine Life Potential
While Barrick projects Tongon will enter care and maintenance by 2027, a new owner might take a different approach. Zijin, with its track record of investing in mine life extensions, could potentially:
- Conduct additional exploration to identify new ore bodies
- Invest in processing technology to make lower-grade ore economically viable
- Implement operational efficiencies to extend profitable production
- Consider underground mining options if economically feasible
The economic threshold for continued operations may differ for Zijin compared to Barrick, potentially extending Tongon's productive life beyond current projections.
Community and Environmental Considerations
Any ownership transition raises important questions about community relations and environmental stewardship. The Tongon mine employs hundreds of local workers and contributes significantly to the regional economy.
Key considerations include:
- Continuity of employment for the existing workforce
- Ongoing community development programs
- Environmental management practices
- Mine closure and reclamation planning
How a new owner addresses these aspects will be crucial for local acceptance and regulatory approval.
FAQs About the Tongon Mine Acquisition
What is the current production capacity of the Tongon gold mine?
The Tongon mine produced approximately 148,000 ounces of gold in 2024, valued at around $504 million at current market prices. However, Barrick expects the mine to enter care and maintenance by 2027 due to declining resources and ore grade challenges.
Why is Barrick selling the Tongon mine?
Barrick is strategically pivoting toward high-margin, long-life assets with a growing focus on copper and strategic operations in Africa and the Middle East. The company has been reshaping its portfolio, including divesting from its Hemlo mine in Canada and selling its stake in the Donlin gold project in Alaska for $1 billion.
What makes Zijin Mining the front-runner for this acquisition?
Zijin Mining is considered the leading contender due to its substantial financial resources, recent expansion strategy in Africa, and willingness to potentially offer up to $500 million for an asset valued around $300 million. The company has demonstrated aggressive acquisition strategies globally, including its recent purchase of Newmont's Akyem gold mine for $1 billion.
How might this acquisition impact the local economy in Ivory Coast?
While specific economic impacts remain to be seen, the acquisition could potentially extend the life of the Tongon mine beyond its currently projected 2027 care and maintenance date. The Ivorian government's preference for a partnership approach suggests interest in maintaining local economic benefits and employment opportunities from the operation.
Market Outlook and Investment Implications
The ongoing consolidation in the gold mining sector presents both challenges and opportunities for investors. Chinese mining companies' growing influence in African resource development may signal changing dynamics in global resource ownership patterns.
For investors watching this space, several factors merit attention:
- Potential premium valuations for producing gold assets
- Increasing influence of Chinese mining companies in West Africa
- Evolving government attitudes toward foreign mining operations
- Strategic repositioning by major Western mining companies
This transaction, when finalized, may serve as a bellwether for similar deals across the gold mining landscape as companies continue to optimize their portfolios in response to changing market conditions and gold price analysis trends.
Furthermore, for those considering gold investment strategies, this transaction highlights the importance of understanding corporate activity in the sector. The consolidation trend may create opportunities to identify potential undervalued gold stocks as assets change hands and market perceptions evolve in response to ongoing industry restructuring.
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