Australia approves Chinese bid for Oz Minerals

[Shuimo]

4/23/2009, 2:21 a.m. PDT
The Associated Press
CANBERRA, Australia (AP) — CANBERRA, Australia (AP) ? China's Minmetals won Australian government approval Thursday to buy most of miner Oz Minerals' operations in a deal that excludes a mine in a sensitive military area.
Minmetals promised to use mostly Australian managers and to expand production at some sites as conditions of the 1.7 billion Australian dollar ($1.2 billion) purchase, Treasure Wayne Swan said in a statement announcing the approval.
The deal adds to a string of foreign acquisitions by China's cash-rich metals and energy producers. They have been welcomed as saviors by some struggling foreign companies but the spending has sparked debate over whether Chinese state-owned enterprises should be allowed to control key mineral resources.

Minmetals Nonferrous Metals Co. will acquire Oz Minerals mining operations in five areas that produce zinc, copper, lead and silver, Swan said.
Oz Minerals will retain the Prominent Hill gold and copper mine, which lies in a military area, the treasurer said.
Minmetals had offered to buy all of Oz Minerals for 2.6 billion Australian dollars ($1.7 billion) but Swan rejected that on national security grounds because it included Prominent Hill.
Employees who answered the phone at Minmetals' Beijing headquarters referred questions to company spokesman Jiao Jian but said he was not available.
The deal is a lifeline to indebted Oz Minerals, the world's second-largest zinc producer and Australia's third-largest mining company. It has said the deal would allow it to pay its debts, with 600 million Australian dollars ($410 million) left over.
Prominent Hill was seen as one of Oz Minerals' most valuable assets, and analysts questioned whether Minmetals would want the company without it.
China's mining and metals companies are flush with cash from its industrial boom and are acquiring assets abroad to profit from future demand.
http://www.oregonlive.com/newsflash/index.ssf?/base/business-3/1240481567261630.xml&storylist=new_topstories

[ren0312]

Debt of Honor anyone?:cantbeli:

[oldsoak]

The deal is a lifeline to indebted Oz Minerals, the world's second-largest zinc producer and Australia's third-largest mining company.

- and they were in financial sh*t ? :roll: How did they manage that ?

- use "mostly" Australian managers ?

[ren0312]

The deal is a lifeline to indebted Oz Minerals, the world's second-largest zinc producer and Australia's third-largest mining company.

- and they were in financial sh*t ? :roll: How did they manage that ?

- use "mostly" Australian managers ?

I read somewhere that with the recent deals, Chinese companies effectively control a large part of the world's strategic ore supply, so you are OK with that?

[void]

Rumour has it amongst people in the field that China is on a spending spree for mining companies and other hard assets, to get rid of their USD holdings ASAP before they are the victim of coming inflation caused by the US bailouts... Expect to see many more purchases like this one in the near future.

[ren0312]

Rumour has it amongst people in the field that China is on a spending spree for mining companies and other hard assets, to get rid of their USD holdings ASAP before they are the victim of coming inflation caused by the US bailouts... Expect to see many more purchases like this one in the near future.

Or they just want control of the world's supply of strategic metals.

[void]

Yes, but the sheer pace with which they are purchasing such hard assets as mines has increased greatly ever since the US bailouts were announced. It is a bit of both, they get to control vital raw material supplies, and at the same time exchange USD (which they think will be hit by inflation) for hard assets.

[oldsoak]

I read somewhere that with the recent deals, Chinese companies effectively control a large part of the world's strategic ore supply, so you are OK with that?

Nope, cant say I am. Firstly, what I am flabbergasted at is that a company in such a lucrative position should have financial problems. Obviously not run by the best people. Sold abroad by Australians - no different to us , I guess.
Secondly, no disrespect to the PRC, but by making them an in-house provider and not just a purchaser puts them in a position of power.

Scenario one - " Sorry about your need for strategic materials, but we've contracted to send
all output to the PRC for the next X years. You may buy back at a grossly inflated price "
Scenarion two -" We're quite sure you wouldnt want to upset the apple cart over anything we do as we are a major source of income for you guys "

[sinophile]

I read somewhere that with the recent deals, Chinese companies effectively control a large part of the world's strategic ore supply, so you are OK with that?

Generally speaking yes. They have half the world's population, so its reasonable to expect them to actually need a large part of the supply. They're the world's largest manufacturer, so they actually use a lot of the supply.

If you're going to worry about grand schemes to rule the world I can think of far worse then this news. Its conceivable they may even LOSE money on this investment.

[Jaegermeister + Red Bull]

The deal is a lifeline to indebted Oz Minerals, the world's second-largest zinc producer and Australia's third-largest mining company.

- and they were in financial sh*t ? :roll: How did they manage that ?

- use "mostly" Australian managers ?

Easy, made the wrong move at the wrong time...M&A at the height of the commodity hyper boom cycle of Oxiana and Zinifex Pty Ltd, thinking the good times will roll on forever...

Yet to say the boom is over is laughable...the 2009 steel ore price most agree will fall back to 2007 levels (30-40% less), yet it is still way higher than 2005 price levels, and 2005 the boom was two years old already...

At the start of the commodity boom, in 2003, there were 20,000 people directly employed by the mining industry...at the height of mid 2008 there were around 45,000 to 50,000. Since the crash around 5000 jobs have been affected...