Australia blocks sale of Oz Minerals to China firm
Aust treasurer cites security concerns as reason for rejection
IHT 31 March 2009
(HONG KONG) Citing national security, Australia on Friday blocked one of several acquisitions China was seeking in the country’s vast natural resources sector, a move that could stoke concerns about rising protectionist tendencies around the globe.
The decision to block the purchase of Oz Minerals, a mining company, by the state-owned China Minmetals, coincides with a heated debate concerning a much larger investment that another Chinese metals company, Chinalco, is planning to make in the Anglo-Australian mining group Rio Tinto.
It also comes two weeks after the Chinese antitrust authorities blocked a move by Coca-Cola to take over Huiyuan Juice Group, a Chinese juice manufacturer, for US$2.4 billion - a decision that caused widespread concern about China’s attitude toward foreign takeovers of local companies.
Wayne Swan, the Australian treasurer, on Friday said his decision to block the Oz Minerals transaction was because the company’s Prominent Hill gold and copper mine, its core asset, is situated near a sensitive defence facility.
‘The government has determined that Minmetals’ proposal for Oz Minerals cannot be approved if it includes Prominent Hill,’ Mr. Swan said in a statement.
He added that discussions were continuing ‘in relation to Oz Minerals’ other businesses and assets, and the government is willing to consider alternative proposals relating to those other assets and businesses’.
Andrew Michelmore, the Oz Minerals chief executive, said the company was in discussions with Minmetals about potential changes to the transaction and would make an announcement ‘as soon as possible’.
Battered by falling earnings as the prices of raw materials have plunged, Oz Minerals and Rio urgently need the cash injections that the Chinese companies’ investments represent.
Oz Minerals is due to repay more than US$900 million in debt this week and must now renegotiate the deal or obtain a loan extension.
Analysts on Friday said it was unclear whether Minmetals would proceed with a deal without Oz Minerals’ core asset.
In a statement issued in Australia, Minmetals said on Friday that it wanted to continue talks. ‘Our focus is on delivering an agreed solution to Oz Minerals that meets national interests, can satisfy lenders, deliver stability to employees and protect existing operations,’ the company said.
Whatever happens, the Friday announcement will fuel the intense debate about a rise in global protectionism, even if Canberra’s rejection was due to security concerns rather than business protectionism.
A recent flurry of bids for some of Australia’s most prized natural resource assets has caused public and political unease in the country, as well as, in the case of the proposed Chinalco transaction with Rio, angry protests from shareholders.
At the same time, however, China is the main buyer of the natural resources that form the bedrock of the Australian economy, making the approval of such deals politically sensitive. - IHT
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Australia blocks sale of Oz Minerals to China firm
Aust treasurer cites security concerns as reason for rejection
IHT
31 March 2009
(HONG KONG) Citing national security, Australia on Friday blocked one of several acquisitions China was seeking in the country’s vast natural resources sector, a move that could stoke concerns about rising protectionist tendencies around the globe.
The decision to block the purchase of Oz Minerals, a mining company, by the state-owned China Minmetals, coincides with a heated debate concerning a much larger investment that another Chinese metals company, Chinalco, is planning to make in the Anglo-Australian mining group Rio Tinto.
It also comes two weeks after the Chinese antitrust authorities blocked a move by Coca-Cola to take over Huiyuan Juice Group, a Chinese juice manufacturer, for US$2.4 billion - a decision that caused widespread concern about China’s attitude toward foreign takeovers of local companies.
Wayne Swan, the Australian treasurer, on Friday said his decision to block the Oz Minerals transaction was because the company’s Prominent Hill gold and copper mine, its core asset, is situated near a sensitive defence facility.
‘The government has determined that Minmetals’ proposal for Oz Minerals cannot be approved if it includes Prominent Hill,’ Mr. Swan said in a statement.
He added that discussions were continuing ‘in relation to Oz Minerals’ other businesses and assets, and the government is willing to consider alternative proposals relating to those other assets and businesses’.
Andrew Michelmore, the Oz Minerals chief executive, said the company was in discussions with Minmetals about potential changes to the transaction and would make an announcement ‘as soon as possible’.
Battered by falling earnings as the prices of raw materials have plunged, Oz Minerals and Rio urgently need the cash injections that the Chinese companies’ investments represent.
Oz Minerals is due to repay more than US$900 million in debt this week and must now renegotiate the deal or obtain a loan extension.
Analysts on Friday said it was unclear whether Minmetals would proceed with a deal without Oz Minerals’ core asset.
In a statement issued in Australia, Minmetals said on Friday that it wanted to continue talks. ‘Our focus is on delivering an agreed solution to Oz Minerals that meets national interests, can satisfy lenders, deliver stability to employees and protect existing operations,’ the company said.
Whatever happens, the Friday announcement will fuel the intense debate about a rise in global protectionism, even if Canberra’s rejection was due to security concerns rather than business protectionism.
A recent flurry of bids for some of Australia’s most prized natural resource assets has caused public and political unease in the country, as well as, in the case of the proposed Chinalco transaction with Rio, angry protests from shareholders.
At the same time, however, China is the main buyer of the natural resources that form the bedrock of the Australian economy, making the approval of such deals politically sensitive. - IHT
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