CANBERRA, AUSTRALIA (AP) - Australia threw up an obstacle Friday to a state-owned Chinese metals company’s bid to acquire miner Oz Minerals Ltd., saying the purchase cannot include a key gold and copper mine in a military area.
Treasurer Wayne Swan’s ruling threatened to wreck China Minmetals Nonferrous Metals Co.’s 2.6 billion Australian dollar ($1.7 billion) acquisition of debt-laden Oz Minerals, which sought the deal as a financial lifeline.
Swan said Minmetals cannot acquire Oz Minerals’ Prominent Hill mine in the Woomera Prohibited Area, a weapons testing range.
The range “makes a unique and sensitive contribution to Australia’s national defence,” Swan said in a statement. “The government has determined that Minmetals proposal for OZ Minerals cannot be approved if it includes Prominent Hill.”
The mine started production last month and is one of Oz Minerals’ most important assets.
Oz Minerals has begun talks with Minmetals about possible changes to the deal, said managing director and chief executive Andrew Michelmore.
Oz Minerals is Australia’s third-largest mining company and the world’s second-largest producer of zinc. It also produces copper, gold, lead and silver.
It is trying to refinance 1.2 billion Australian dollars ($780 million) in debt that is due March 31. The debt was accumulated as Oz Minerals was formed through the merger of mining companies Oxiana and Zinifex.
Swan said the Foreign Investment Review Board was holding talks with Minmetals on Oz Minerals’ other assets.
“The government is willing to consider alternative proposals relating to those other assets and businesses,” he said.
Minmetals had $20.7 billion in revenue in 2008. The company has 44 subsidiaries in 15 countries. It has ready access to financing from Chinese state banks and says the Oz Metals takeover would be financed with long-term loans.
A spokesman for Minmetals, Ian Smith, said the Chinese suitor was in talks with the government.
“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,” Smith said.
Australian regulators also are considering a proposal for another Chinese state-owned company, Aluminum Corp. of China, or Chinalco, to invest $19.5 billion in Anglo-Australian miner Rio Tinto Group.
Swan says he will approve it only if it is deemed to be in the national interest.
Chinese metals companies are flush with cash from supplying the country’s manufacturing boom and are looking for investments abroad that will let them profit from future demand.
Minmetals Chairman Zhou Zhongshu told the state newspaper China Daily last month that the company plans to expand abroad through mergers and acquisitions, taking advantage of a decline in asset prices due to the global financial crisis.
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On the Net:
China Minmetals Nonferrous Metals Ltd: https://www.minmetals.com/english/legal.jsp
Oz Minerals Ltd.: https://www.ozminerals.com
Australian Treasury: https://www.treasury.gov.au
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