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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (38416)	6/11/2009 4:58:39 PM
From: LoneClone	Read Replies (1) \| Respond to of 194794

China Minmetals Shows How to Get a Resource Deal Done blogs.wsj.com By Peter Stein When it comes to executing resource deals abroad, China hasn’t lost all its mojo. Shareholders of OZ Minerals today voted to approve a $1.39 billion offer from China Minmetals Non-ferrous Metals Co. to buy some of the cash-strapped Australian miner’s assets. This should come as a relief to those in China who might have worried that Australia and the developed world were a lost cause when it came to Chinese outbound investment in resources. Last week, China’s efforts on that front met a surprising setback when Rio Tinto, the Anglo-Australian mining giant, rejected a $19.5 billion investment proposal from Aluminum Corp. of China, or Chinalco, in favor of a tie-up with BHP Billiton and a $15.2 billion rights issue. OZMIN0611_D_20090611051357.jpgAFP/Getty Images A front-end loader carries copper concentrate at Oz Minerals’ Prominent Hill copper and gold mine in the sensitive military testing area of South Australia The defeat brought back painful memories of Chinese offshore oil driller Cnooc’s failed 2005 bid to acquire Unocal, which collapsed amid political opposition from U.S. lawmakers talking up the potential Chinese threat to American economic security. Chinalco faced similar political pushback in Australia. On Wednesday, an unsigned editorial carried by China’s state-run Xinhua news service, decried “the perfidy of Rio” and attacked its “short-sightedness and possible political prejudice.” But ultimately, financial concerns probably played a bigger role in Chinalco’s failure: an upturn in commodity and stock prices this year gave Rio an attractive alternative for raising capital that didn’t require it to give up any equity control. Chinalco President Xiong Weiping lamented Thursday that he would gladly have made concessions to save the Rio deal, including cutting its stakes in Rio and a key iron-ore business in half. From the get-go, the Minmetals offer for OZ Minerals had a couple of things going for it that Chinalco’s bid for Rio didn’t. For one, Minmetals had already met its political challenge when it agreed in April, among other things, to exclude the Prominent Hill mine from its offer. Regulators had said the mine was too close to a government weapons-testing range. Also, the OZ board was unwavering in its support, despite two 11th-hour efforts to derail the sale from banks, including Macquarie Group, offering recapitalization plans of their own. Their reasoning, in so many words: a Chinese bird in the hand is worth more than two recap deals in the bush. And Minmetals never faced the shareholder resistance sparked by Rio’s deal, which offered Chinalco favorable terms that other shareholders resented. Then the Chinese bidder made a smart play late Wednesday, sweetening the pot to US$1.39 billion from the US$1.2 billion it offered in April. The extra cash tipped the deal closer to the bottom end of valuations that an adviser to OZ Minerals had given for the assets and helped demonstrate that Minmetals wasn’t deaf to concerns that its offer hadn’t kept pace with rising commodity prices. On Thursday, shareholders handily approved the deal. It has no doubt gotten tougher for China to snap up resource assets as markets have regained some liquidty. Still, the OZ Minerals deal shows it is by no means impossible.