Minmetals offers to take fewer assets in revised US$1.2b OZ Minerals bid

PUBLISHED : Thursday, 02 April, 2009, 12:00am
UPDATED : Thursday, 02 April, 2009, 12:00am

China Minmetals Corp, the largest metals trader on the mainland, has agreed to pay US$1.21 billion for fewer of the mining assets owned by OZ Minerals after the Australian government objected to the original deal.

The new deal includes the Averbury, Century, Golden Grove and Rosebury mines in Australia, the Sepon copper and gold mine in Laos and mines in Canada. It still needs approvals of OZ Minerals shareholders and the Australian government.

'Hopefully, they will be sensible about it at the [Foreign Investment Review Board],' said a person working on the deal.

The board is the government body responsible for vetting foreign investment in Australia.

The Australian government last week rejected the original A$2.6 billion (HK$13.94 billion) proposal from Minmetals because the main asset, the Prominent Hill copper and gold mine, is near Woomera, a missile and aerospace technology test site.

The Australian government said Chinese ownership of that asset would have constituted a risk to the country's national security.

In the new deal, the Martabe gold and silver mine and listed assets such as Toro Energy have also been excluded.

Because of the new deal, creditors granted OZ Minerals another month to settle its A$1.1 billion debt. Should OZ Minerals pay off its total outstanding debt of A$1.3 billion, it would have about A$600 million in cash, the company said.

OZ Minerals shares closed down 3.6 per cent at 53.5 Australian cents yesterday, well below the original Minmetals offer of 82.5 Australian cents a share.

Australia's Treasurer Wayne Swan approved on Tuesday Hunan Valin Iron & Steel's A$644.8 million acquisition of a 17.4 per cent stake in Fortescue Metals Group, the third-largest iron ore mining company in Australia.

Mr Swan last month extended to 90 days the time he could take to rule on a US$19.5 billion bid by Aluminum Corp of China to acquire almost 18 per cent of Rio Tinto Group as well as stakes in its key assets.

Under review board rules, the government should make a decision within 30 days of the offer but can extend the time period for 90 days.

The government has also taken to returning applications to companies before the 30-day period is up and asking them to reapply in a move apparently aimed at delaying any decision. Some companies have been waiting a year or more for approval under this strategy.