China’s Sinosteel Set to Snap up Australian Miner Midwest

From AFP:

Australian iron ore miner Midwest said on Wednesday it had accepted an improved takeover offer from China’s Sinosteel, as the resource-hungry Asian giant moves to secure raw material supplies.

Midwest’s board backed the offer of 6.38 dollars per share, which values the firm at 1.36 billion dollars (1.27 billion US), in a statement to the Australian Securities Exchange late Tuesday.

Australian officials went on to make it clear that they do not believe that this deal represents a threat to either Australian companies or their resources (AFP):

Australian Treasurer Wayne Swan said he was not concerned at moves by Beijing-owned firms to buy up Australian resource companies, although he said they could expect the same scrutiny as for any other deal.

“Chinese investment has got a role to play in this country but we’ve made it very clear when it comes to foreign investment from Chinese government entities that we will apply our national interest criteria as we do in all other cases,” Swan told Sky News.

The Australian also published a more detailed account of the politics surrounding the deal:

. . . The big questions are whether it is politically sustainable for Sinosteel to lead a consolidation in the Mid West. Is it really in Australia’s national interest to allow Chinese government-owned customers for our raw materials to own 100 per cent of an emerging iron ore province?

It is understood that one of the postponed decisions was Sinosteel’s application to buy Murchison. Another to be rebuffed was China Metallurgical Group, which was told to relodge its application to buy the Cape Lambert iron ore project for $400 million.

The projects owners, Cape Lambert Iron Ore Ltd, confirmed yesterday that the FIRB had told China Metallugical to re-submit because it would be unable to make a determination before the statutory deadline.

Which suggests that, by then, the federal Government will have to sort out its longer term approach to the conflicts inherent in Chinese ownership of Australian resources.

April 30, 2008 12:51 PM
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