Chalco said it would not move ahead with plans to acquire the controlling stake in SouthGobi Resources for $C889 million until it received all necessary regulatory approvals.

In early April, Chalco announced it intended to make a takeover offer for the 60% interest in the Mongolian producer for $8.48 per share.

Chalco already has support from SouthGobi’s 57.6%-shareholder Ivanhoe Mines for the transaction.

In an announcement released to the market on Wednesday, Chalco said Mongolia was assessing the prospect of introducing new foreign investment laws, which would include the establishment of fair transfer pricing and taxation regimes with foreign investors.

The laws, if implemented, would also allow the government to assess all investments.

The proposed law changes put another speed bump into the proposed deal, with the Mongolian government recently announcing it would suspend SouthGobi's mining permits – including the ones pertaining to its Ovoot Tolgoi coal mine.

Despite the news, Chalco and Ivanhoe plan to cooperate with the Mongolian government in a bid to ensure the deal moves ahead.

Subject to regulatory approvals, Chalco said it might withdraw its bid for the stake in SouthGobi or extend its bid up to 180 days from the date of the offer to allow time for regulatory processes to be completed.

Chalco believes the proposed deal with SouthGobi would be of “net benefit” to Mongolia and the Mongolian mining industry.

Chalco is aiming to leverage its position as an established metals and mining company to further enhance the coal operation of SouthGobi.

SouthGobi has a dual-listing on the Hong Kong Stock Exchange and the Shanghai Stock Exchange and focuses on exploration and development of metallurgical and thermal coal deposits in Mongolia’s South Gobi region.

Its flagship Ovoot Tolgoi mine began production in 2009 and sells coal to customers in China.