A leading Chinese non-ferrous metal company yesterday won approval for its acquisition of a top Australian miner - only days after China's dominant1 aluminum2 company was thwarted3 in its bid for a bigger stake in another Australian miner.
China Minmetals Non-ferrous Metals Co Ltd (Minmetals) was dexterous4 in its dealing5 with OZ Minerals Ltd, setting an example for Chinese enterprises investing in overseas resources, experts said.
Minmetals acted quickly to raise its offer for OZ's assets from $1.21 billion to $1.39 billion, responding to increasing domestic and international metal prices in recent months, showing more flexibility6 than seen in the aborted7 deal between Aluminum Corp of China (Chinalco) and Rio Tinto.
In April, Minmetals also revised its proposal to exclude from the purchase the Prominent Hill mine, which the Australian government said was sensitive because it is close to a weapon-testing area.
Following the moves, Minmetals got overwhelming support from shareholders9 attending the OZ Minerals annual general meeting in Melbourne yesterday.
Zhou Zhongshu, president of Minmetals, said in a statement emailed to reporters: "This was a landmark10 for China Minmetals which can better develop its business in Australia, and will also contribute to local economic development, employment and tax revenues."
The two sides will finalize11 the deal within a week, according to Minmetals. The company will register and establish a wholly-owned subsidiary in Australia, Minerals and Mining Group Ltd (MMG), to manage the assets.
Zhou said after the success, MMG will contribute to a "stronger bilateral12 relationship" between China and Australia.
Meanwhile, addressing a press conference yesterday for the first time since the collapse13 of its deal, Chinalco president Xiong Weiping said that Chinalco "had been willing" to cut its shareholding14 in Rio Tinto and its stake in Rio Tinto's Hamersley iron ore operations to keep its $19.5 billion alliance.
But the two sides failed to secure the deal because of additional disagreements, such as Chinalco's presence on the board and an issue of convertible15 bonds, he revealed.
Calling the collapse a "setback16", Xiong attributed it to factors beyond the company's control, such as the recovery of the metal market and the attitude of Rio Tinto's shareholders - even though the company showed "great flexibility" in the four months of negotiation17 and "offered several amendments18".
As for Rio Tinto's planned joint19 venture with BHP Billiton, Xiong said that as the largest single shareholder8 of Rio Tinto, Chinalco is paying close attention to the $15.2 billion rights issue.
Chinalco's offer does not reflect the price increases in the metal market after it has turned around, said Peng Bo, analyst20 at Guosen Securities. It should have considered imposing21 constraint22 conditions to the deal when inking the agreement when the market was low, Peng said.
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