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Minmetals fails to cross the OZ hurdle

By Jiang Wei (China Daily)
Updated: 2009-03-28 09:11

A worker standing atop a concentrator at the OZ Minerals mine in Queensland. [Agencies]

The Australian government on Friday rejected State-owned Minmetals' planned $1.7 billion takeover of OZ Minerals as a copper-gold mine of the Australian miner is close to a weapon-testing site.

Australia's Federal Treasurer, Wayne Swan, said in a statement on his website that Minmetals' bid cannot be approved if it includes the Prominent Hill mine. But he said the Australian government is willing to consider alternative proposals relating to other assets and businesses.

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"OZ Minerals' Prominent Hill mining operations are situated in the Woomera Prohibited Area in South Australia. The Woomera Prohibited Area weapons testing range makes a unique and sensitive contribution to Australia's national defense," he said.

Minmetals had proposed to offer 82.5 cents (a 50 percent premium) for each share of OZ Minerals, which owns copper, lead, zinc, gold and silver mines. Prominent Hill project is one of the key assets of the Melbourne-based company.

OZ Minerals' Chief Executive Officer Andrew Michelmore said in a statement that the company was in discussion with Minmetals regarding possible changes to the proposed transaction structure in light of the Treasurer's statement and would make a further announcement as soon as possible.

"Minmetals remains in discussions with Foreign Investment Review Board," Ian Smith, an Adelaide-based spokesman for Minmetals was quoted by Bloomberg as saying. The board recently extended its investigations in the case.

"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," he said.

Minmetals officials in charge of the deal in Beijing remained unavailable for comments.

"The rejection will not block Minmetals' overseas expansion plans," said Geng Nuo, analyst, Greatwall Securities. "It may adjust its strategy but may not stop."

Many Chinese companies are expected to pursue overseas investments to cash in on the opportunities emerging due to the global economic slowdown despite the rejection in this case, she said.

The Australian government is also considering the largest overseas investment in history proposed by a Chinese company: Aluminum Corp of China's $19.5 billion investment in mining company Rio Tinto. Caijing magazine reported that Agricultural Bank of China had joined China Development Bank, Export-Import Bank and Bank of China in providing financial support to the State-owned company for the deal.