Narrative
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Project narrative
On January 10, 2011, China National Bluestar Group Co., Ltd. — a Chinese state-owned chemical company and subsidiary of China National Chemical Corporation (ChemChina) — signed a binding Sales and Purchase agreement with Orkla ASA for the acquisition 100% of the shares and sole control of Norwegian aluminum and silicon producer Elkem AS from Orkla to Bluestar for $2 billion USD (kr13 billion) {see ID#197076; #197069; and pg.3 of ID#197078}}. To support this acquisition, China Development Bank Corporation (CDB) issued a $1.5 billion USD loan to Bluestar to support its acquisition, as captured by Record ID#102321. Furthermore, the Ministry of Commerce of the People's Republic of China (MOFCOM) provided 'financial support' of RMB 450 million for the acquisition of Elkem AS, as captured by Record ID#102323. The acquisition of Elkem AS included Elkem Silicon Materials, Elkem Foundry Products, Elkem Carbon, and Elkem Solar, but not the shares of Elkem Energi AS and its 85% stake in 85% stake in AS Saudefaldene. The agreement included a 1.5 TWh/year power contract that Orkla acquired in 2010 to power Elkem's Norwegian smelting plants. At the time of the acquisition, Elkem AS was a wholly-owned subsidiary of Bluestar. Elkem is a high-grade silicon manufacturer based in Norway. It is one of the world's leading leaders and manufacturers of silicon and special alloys. Elkem produces energy-efficient of high-grade silicon for solar technology and computers. The European Commission scrutinized the independence of Bluestar as a Chinese state-owned enterprise under ChemChin, which was under the central government, for anti-trust purposes. After a detailed examination of the overlap between Elkem's activities and ChemChina's and other SOEs under the administration of Chinese government, the European Commission found no competitive concern with it. On March 31, 2011, the European Commission announced non-opposition to the acquisition. The acquisition was completed on April 14, 2011. The acquisition of Elkem improved the competitiveness of Chinese solar companies on the international market. On March 22, 2018, Elkem AS concluded its initial public offering (IPO) and was listed on the Oslo Stock Exchange, becoming Elkem ASA. As of June 12, 2019, Bluestar held a 58.20% stake in Elkem ASA via wholly-owned subsidiary Luxembourg-incorporated Bluestar Elkem International Co., Ltd. Elkem operated in Brazil, Canada, China, Iceland, Malaysia, Norway, and South Africa.
Staff comments
1. Prior to the acquisition, Elkem AS was a Norwegian company owned by the Norwegian group Orkla ASA. Elkem AS was primarily active in the production and sale of (i) silicon related materials, namely silicon. One of the most important products of Elkem AS is silicon metal, which is produced by smelting a number of raw materials, namely silica (i.e. quartz) and other raw materials. (coal, petroleum coke) in an electric arc furnace. The output comprises a spectrum of different grades of silicon metal with a Silicon ('Si') content above 95 % containing varying levels of impurities (e.g. iron, aluminum, and calcium). Silicon metal is used in (i) the production of silicon of extreme purity, referred to as polysilicon which is in turn used for producing solar cells or with an even greater purity for electronics (semiconductors and microchips). Other applications are (ii) the chemical industry (mainly as an input in the production of silicones and silanes and coatings) and (iii) in the production of aluminum which is then used in a number of industries such as car manufacturing. 2. China National Bluestar Group Co., Ltd. is a Chinese company primarily active in the production of new chemical materials, including silicones, petrochemicals, industrial cleaning products and membrane and water treatment products. Bluestar also produces silicon metal and microsilica. Bluestar is a subsidiary of China National Chemical Corporation (ChemChina), a diversified company active in the production of a wide range of chemical products. ChemChina is wholly owned by the People's Republic of China; it reports to the State-owned Assets Supervision and Administration Commission (SASAC) operating on the central government level and established directly under the State Council. 3. The specific flow type of the support of MOFCOM is unclear. It is referred to in a ChemChina prospectus as "financial support" (see page 73 of https://www.dropbox.com/scl/fi/0f3qsb3yb31pe48yjttjo/Chemchina-Preliminary-Offering-Circular-1.pdf?rlkey=w0no012fcfs9okufb7wb2bueg&e=2&dl=0 for the specific quote) in a paragraph that goes over numerous loans from Chinese state-owned banks to ChemChina used for mergers & acquisition. It is possible the specific flow type was some sort of debt instrument. This issue merits further investigation. 4. The precise commitment date is unknown. For the time being, AidData has coded the sales and purchase agreement signing date as the commitment date, with the commitment_date_estimated? field marked as True. This issue merits further investigation.