Chinese Firms Meet Obstacles in Australia
After the examination of Aluminum Corp of China’s (Chinalco’s) investment in Rio Tinto, the Australia government has decided to extend another similar examination of two more Chinese firms’ investment in the country’s miners.
According to what OZ Minerals said on Monday, the country’s Foreign Investment Review Board would extend its review of the takeover of OZ Minerals by China’s Minmetals from March 24 and the examination would last for 90 days.
As China’s largest metal trader, the Minmetals Corp. last month advanced to buy the Australian mining firm for a $2.6 billion ($1.7 billion) in cash to ensure enough supplies of non-ferrous metals. The Melbourne-based company operates zinc, lead, copper, gold and silver mines in Australia and abroad.
OZ Minerals said it would follow proper processes as required and Minmetals’ application would be determined as soon as possible considering the interests of OZ Minerals, its shareholders, employees and all its stakeholders.
The company has asked its lenders to extend a March 31 debt deadline to Sept 15, so time for concluding the deal will be available. An unsuccessful takeover of OZ will lead to its failure to refinance $1.3 billion in debt. Minmetals said yesterday it had confidence about the approval for the bid from Australia.
Bloomberg quoted Wang Jionghui, general manager of the mineral resources division at Minmetals, as saying that the obstacles encountered by overseas investments would be reduced because mining companies are in lack of capital.
The Review Board announced last Thursday that it would extend the examination of Fortescue’s planned sale of a stake to China’s Hunan Valin Iron and Steel for up to 30 days.
Fortescue said it still has confidence about Valin’s successful gaining of approval from the government due to the structure of the share subscription agreement. Valin decides to pay about $770 million for a 16.5 percent stake in Fortescue under a deal announced last month.
According to analysts, Chinese companies have won opportunities to make overseas investments as a steep fall in the prices of key resources caused by the economic crisis. However, such intensive acquisition may bring attentions to the destination countries from public as well as the government.
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