Tensions between China and Australia over the arrest of Rio Tinto executives for alleged spying have not thwarted other commercial transactions. Australian mining firm RMA Energy yesterday expressed enthusiasm for a proposal by China Railway Group, one of the mainland's largest state-owned rail construction firms, to acquire a majority stake in RMA for up to A$15 million (HK$97.82 million). China Railway, through wholly owned mining subsidiary China Railway Resources Group, said on Monday that it intended to increase its stake in RMA from 11.2 per cent to a maximum of 82 per cent. China Railway, which is listed in Hong Kong and Shanghai, said it would offer 6.5 Australian cents per share in cash, a 38 per cent premium to RMA's closing price on August 7. 'The interest by China Railway in RMA is very much welcome,' said David Tasker, an RMA spokesman. 'RMA has been engaged in positive discussions with China Railway for an extended period of time, as they are clearly a partner capable of providing the technical and financial capabilities to develop RMA's mineral assets in Queensland,' said RMA managing director Clive Triplett. The Australian firm's mining operations would require the construction of infrastructure, such as rail, which would create synergies with China Railway, said a source close to the discussions. RMA, which has barely started mining operations, reported a A$1.36 million net loss last year. It has mining projects in uranium, tin, coal and base metals in Queensland. The company is 56.6 per cent owned by Ansett Resources and Industries, a private firm controlled by Terence Byrt, who resigned as RMA chairman in April. Although China's 4 trillion yuan (HK$4.54 trillion) stimulus has created massive railway construction orders for China Railway, the stimulus will only last through 2010, said China Railway chief financial officer Li Jiansheng. 'If we don't develop overseas, once the stimulus is over, our business may shrink,' said Ms Li. 'China's rail market won't have high growth forever.' China Railway Resources may continue to acquire mining assets in Australia, added Ms Li. 'China Railway Resources is a mining company. If it doesn't acquire mining assets, how can it function?' In three to five weeks, China Railway will issue a formal offer document, after which RMA's shareholders will decide whether to accept its acquisition proposal. The deal will also require regulatory approval from Australian and mainland authorities. Normally, such a transaction would take about three months to complete.