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Australian iron ore miner Midwest Corp has rejected Sinosteel Corp's US$1.2 billion acquisition bid, saying  the offer was too low amid soaring prices for the raw material.
Given that the world's biggest mining firm, Vale, raised contract prices on iron ore with Japanese and South Korean steelmakers by 65 per cent, Midwest said its board  remained 'very positive' about the market and the firm's prospects.
'The board has unanimously formed the view that an offer at A$5.60 (HK$40.16) per share would undervalue the company and its prospects,' Midwest said in a statement yesterday.
Chinese companies are trying to increase  investment in resource-rich Australia to ensure supply for  industries.
Australian  miner Mount Gibson Iron yesterday asked the country's regulators to block the acquisition by the Hong Kong-listed arm of mainland steelmaker Shougang Corp of a stake in the company because of questions regarding its relationship with other stakeholders.
David Law, who owns a 14 per cent stake in Midwest and could rally support from shareholders controlling an additional 25 to 31 per cent of the company, had been holding out for a higher bid, sources said earlier.
Midwest shares shed 7.18 per cent yesterday to close at A$4.91, 12.32 per cent lower than the A$5.60 offer the firm said it received in December.
Sinosteel spokesman Zhu Songbai declined to comment.
Midwest also attracted a bid from Murchison Metals,  which offered one of its shares for 1.08 Midwest shares.
The two firms own adjacent iron ore projects in Western Australia, which makes a tie-up attractive.
Sinosteel's offer, however, represented a higher valuation and Murchison retracted its offer earlier this month. Sinosteel increased its stake in Midwest to 18.7 per cent by acquiring shares on the open market on January 31.
'It's just a matter of  pricing and valuation. Everyone has a different valuation on a company,' said DBS Vickers metals analyst Helen Wang.
Sinosteel has been buying mining assets  overseas, including a 92 per cent stake in Zimbabwe chrome producer Zimasco Consolidated Enterprises.
The firm  planned a US$2 billion initial public offering to help fund expansion, sources said.
Holding out
Midwest says its board remains positive about the company's prospects
Sinosteel's offer made in December valued Midwest at, in US$: $1.2b



Australian miner Midwest rejects Sinosteel takeover offer