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Sinosteel seeks Australian approval
(China Daily/Agencies)
Updated: 2008-06-27 10:59 Sinosteel Corp, China's second largest iron ore trader, is seeking Australian approval to take a "substantial" stake in Murchison Metals Ltd, which may allow it to control a A$3 billion ($2.9 billion) mining project. The Treasury will study Sinosteel's plans to buy a "substantial shareholding" and Murchison's assets for 90 days, according to a government gazette. Sinosteel owns 2.4 percent of the Perth-based iron ore producer, and is offering A$1.36 billion for Australian mining rival Midwest Corp. Taking control of both companies may enable Sinosteel to speed up the building of mines and a port to export to China, the world's largest consumer of iron ore. Both companies are situated in the mid-west region of Western Australia. Murchison, which has also bid for Midwest, fell 7 cents, or 2 percent, to A$3.49 at 4:10 pm Sydney time on the Australian stock exchange, valuing the company at A$1.43 billion. Midwest fell 18 cents, or 2.7 percent, to A$6.40. Overseas acquirers need approval from the government to own 15 percent or more of an Australian company. OAO Magnitogorsk Iron & Steel's investment in Australia's Fortescue Metals Group Ltd was given approval in March after the government said it would consider it last September. Australia welcomes foreign investment, Federal Treasurer Wayne Swan said yesterday, according to an e-mailed transcript of a news conference in Canberra. China may invest more than A$30 billion in fiscal 2008, he said earlier this month. "We welcome it from everywhere, including China, but we will apply decisions on a case-by-case basis in the national interest," he said yesterday. He would not comment specifically on Sinosteel's application. The order from the Treasury prevents Sinosteel from buying more than 15 percent of Murchison while it studies the application, Murchison said yesterday. The order doesn't indicate how the Treasurer will respond, the company said. "Significant foreign capital will be required to successfully develop the mid-west region's new mines and supporting infrastructure and Murchison notes comments yesterday by the Treasurer Wayne Swan that the federal government continues to welcome foreign investment," the company said in a statement. Sinosteel would have to contend with other shareholders of Murchison. South Korea's Posco, Asia's third largest steelmaker, owns 9.8 percent, and Harbinger Capital Partners Ltd owns 19.7 percent. Murchison has a venture with Japan's Mitsubishi Corp to build the mine and port. Iron ore prices have soared for six years to a record, raising costs for Chinese steelmakers, the world's largest producers. Australia, the world's largest exporter of coal and iron ore, is delaying investment approvals for Chinese companies, Beijing-based Sinosteel said last month. Sinosteel's proposed acquisition of Midwest would be the largest overseas metals takeover by a Chinese company, according to Bloomberg data. It has bid A$6.38 a share for Midwest and owns a 43.6 percent stake in the Perth-based company. (For more biz stories, please visit Industries)
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