Sinosteel eyes bigger Murchison stake
Sinosteel Corp, the second-largest iron ore trader in China, has asked the Australian government for approval to take a substantial stake in Murchison Metals, its rival bidder for the control of miner Midwest Corp.
An approval would clear a hurdle in case Sinosteel wants to increase its 2.4 per cent stake in Murchison, although the mainland firm said yesterday that its focus remained on buying Midwest and it had not talked to Murchison.
Australia caps foreign investment in domestic firms at 15 per cent unless its Foreign Investment Review Board grants an approval.
The board said yesterday that it would study Sinosteel's plans over the next 90 days.
'We welcome [investment] from everywhere, including China, but we will apply decisions on a case-by-case basis in the national interest,' Treasurer Wayne Swan said.
Sinosteel has the upper hand in the offer for Midwest, which closes on July 18, as it holds a 43.62 per cent stake in the miner.
Murchison's merger proposal through a share swap has suffered a setback as Australia's Takeovers Panel has banned Murchison shareholder Harbinger Capital Partners from exercising part of its voting rights in Midwest.
Midwest and Murchison are seeking to develop A$3 billion (HK$22.5 billion) worth of mine, port and rail projects in the midwestern part of Western Australia.
Control of both firms may enable state-owned Sinosteel to develop the projects faster and ship iron ore to China.
The development of the projects to date has involved significant foreign investment from a range of international investors from South Korea, Japan, Malaysia, the United States and China.
A Sinosteel spokesman said the company was 'very much focused on securing control of Midwest and getting further acceptances for its A$6.38 per share unconditional offer'.
'We have not contacted Murchison and made an offer.'
Murchison said Sinosteel's application for a substantial stake in the company would not affect its merger offer with Midwest.
Sinosteel would not be able to buy more than 15 per cent of the Australian company while the government studied its application, Murchison added.
Murchison's shareholders include US-based hedge fund Harbinger and Korean steel giant Posco.
Murchison has a venture with Japan's Mitsubishi Corp to build the Midwest projects.
