Recently, Merrill Lynch & Co., Inc. (ML) has purchased an over 30% stake in Shanxi United Magnesium Industry Co., Ltd. (Shanxi United Magnesium) for US$30 million. Shanxi United Magnesium will use the proceeds to carry out a series of M&A and consolidation, with Shanxi-based magnesium mines as major acquisition targets.

Registered in 2004, Shanxi United Magnesium is a joint venture between U.S. United Magnesium Industry Co., Ltd. and Shanxi Weida Communications Co., Ltd. The reason why ML had invested in Shanxi United Magnesium is that despite the small size in scale, Shanxi United Magnesium has prevailed over its domestic peers in environmental protection and pollution control. In ML¡¯s view, the scale expansion for Shanxi United Magnesium can be achieved, sooner or later, but pollution control and environmental protection in the long term is essential.

Reportedly, ML conducted the investment via its capital investment unit. To help close the deal, a new joint venture between ML and Shanxi United Magnesium is registered in China. The joint venture company is said to have received the approval from the Commerce Department of Shanxi Province. The investment is the first for ML¡¯s capital investment unit to conduct in China alone.