China Minmetals leads five-strong group set to bid as much as US$5b for Noranda A five-member mainland consortium led by state-owned China Minmetals Corp is poised to make a bid, likely to be priced at between US$4.2 billion and $5 billion, for Canada's biggest mining company Noranda. Financing for the deal, which would be the first mainland takeover of a United States-listed company if it proceeds, will come from China Development Bank. The members of a consortium set up by Minmetals to make the offer were Minmetals itself, Baoshan Iron & Steel, Citic Investment Corp, Jiangxi Copper and Taiyuan Iron & Steel, sources close to the deal said last night. 'A major portion of the funding will be in the form of a soft loan, which will be equivalent to China Development Bank taking an equity stake in Minmetals, the leader of the special purpose vehicle,' a source said. 'They will be the real force behind the scenes. It's their money, they're running the show, and they will have a powerful influence over Minmetals,' the source said. News of the deal emerged in a statement to the stock exchanges of Toronto and New York, on which Noranda is listed, on Friday. However, weekend news reports that followed did not mention the structure of the special purpose vehicle, what the source of finance might be, or the role of China Development Bank. The bank is charged with financing economic policy directives set by the mainland government, which has issued an 'informal edict' to the mainland's metals' fabricators to secure the supplies of raw materials needed to maintain output of consumer appliances, cars and apartments, on which the country's economic growth depends. Minmetals' bid is believed to target Noranda's zinc, copper and nickel output, but not its supplies of fabricated aluminium - a point of detail that could explain the wide gap in the likely bid prices. 'What the special purpose vehicle wants to do is leave the aluminium business out of the deal. The price they are likely to offer will be flexible but they don't want the aluminium business,' the source told the South China Morning Post. Minmetals, which was being advised by Citigroup, had 45 days to reach agreement on the final shape and price of the deal, the exchange announcements said. Though it will lead the consortium's bid, Minmetals was said to be 'pretty cash-poor' and highly dependant on financing from China Development Bank which is being advised by HSBC. 'The financing will come in two tranches, a soft loan and a commercial loan. Terms are still under negotiation but the soft loan will be equivalent to China Development Bank taking an equity stake in Minmetals,' the source said. The deal is expected to be concluded by the middle of November. Reuters reported at the weekend that though no price had been put on the bid, it was expected to reflect a 'small premium' on Noranda's share price. Noranda's market value, it said, had ranged between C$6 billion (HK$36.72 billion) and C$7.4 billion, or C$20 and C$25 a share, since June 16 when the Toronto-based miner and its parent Brascan Corp revealed that several unnamed suitors were keen on Noranda.