Citic lifts stake in Macarthur Coal

PUBLISHED : Tuesday, 03 July, 2007, 12:00am
UPDATED : Tuesday, 03 July, 2007, 12:00am

Citic Resources Holdings, a unit of state-owned conglomerate Citic Group, has paid A$112.9 million (HK$754.79 million) to raise its stake in struggling Australia-listed Macarthur Coal, increasing its non-oil holdings before a potential spin-off of these assets.

The mainland company has bought 15.68 million shares at A$7.20 each from Macarthur Coal's largest shareholder, Talbot Group, according to a joint statement by trading arm Citic Resources Australia and Talbot Group. This raised Citic Resources' stake to 19.99 per cent in Macarthur from 11.62 per cent, while cutting Talbot's to 27.2 per cent from 35.57 per cent.

The news comes after Citic Resources chairman Peter Kwok Viem said last week the company was mulling a separate listing for its non-oil assets, after its US$1 billion acquisition from its parent of a 47.3 per cent stake in Kazakhstan oil firm Karazhanbasmunai and related assets.

The purchase turned Citic Resources into an oil-focused company, away from a previous concentration on metals mining and trading. In addition to being a shareholder of Macarthur for 10 years, Citic Resources has also been a joint venture partner in its Coppabella and Moorvale mines.

Macarthur is forecast to see net profit tumble to A$63 million this year from A$149.59 million last year, but will recover to A$110 million in 2009, according to Reuters estimates quoted in a Kim Eng Securities research report.

Despite high coal prices, profit this year has been hurt by production hiccups and transport bottlenecks.

The company has also been hurt by its founder and former chief executive Ken Talbot being charged last week for allegedly making payments to a government official. He has pleaded not guilty.

Macarthur's sales volume plunged 49.1 per cent year on year in this year's first three months to 672,600 tonnes, it said in its quarterly report, citing the fall on faulty mining equipment and port congestion.

'Increased congestion is being experienced at all coal ports along the eastern seaboard of Australia,' Macarthur said in the report, adding that loading delays had increased from two weeks at the end of February to four weeks at the end of March.

Besides Macarthur, Citic Resources' metal assets also include a minority stake in Australia-listed Mount Gibson, as well as 22.5 per cent in a joint venture aluminium smelting plant in Australia.

In China, it has 48 per cent of Citic Dameng Mining Industries, a manganese mining venture, which owns 22 per cent of the country's proven reserves of the metal.