Australian miner OZ Minerals agreed to sell most of its assets to China's Minmetals for $1.21 billion today, securing Australian mining's second big Chinese investment in as many days.
The OZ Minerals deal, renegotiated after Australia's government blocked a takeover by the state-owned Chinese firm, promises to rescue the world's second largest zinc miner from a debt crisis and gives Minmetals all but two of OZ Minerals' main assets.
It follows approval yesterday of a $438 million Chinese investment in iron ore miner Fortescue Metals Group and comes as Australia's Foreign Investment Review Board (FIRB) is looking at Chinalco's $19.5 billion investment in global miner Rio Tinto.
A decision on the Chinalco-Rio deal could take until June.
“What this really does show is the goodwill from Minmetals to actually come back with a proposal that's attractive to shareholders, suppliers and customers and meets the government's requirements...,” OZ Chief Executive Andrew Michelmore said.
Australia had on Friday rejected Minmetals' original $1.8 billion bid for OZ because OZ Minerals' prized Prominent Hill mine was near a military weapons-testing range in the deserts of outback Australia.
The new deal excludes the Prominent Hill mine.
OZ shares, resuming trade for the first time since the original takeover was knocked back, fell as much as 19 percent as hedge funds who had bet on the initial deal going ahead bailed out.
The stock later recovered to trade flat at A$0.555, although well below Minmetals original offer of A$0.825 a share.
Analysts said the deal at least appeared to safeguard OZ Minerals immediate future and allow it to pay down debt. As a result of the new deal, OZ Minerals' lenders have extended a debt repayment deadline on A$1.1 billion by a month to April 30th.
“It's potentially a reasonable solution out of a very murky situation,” said Perennial Growth's West.
Minmetals said it expected a swift government decision on the revised deal as much of the material had already been reviewed.
“If the FIRB's objections were about Prominent Hill, this effectively addresses that issue, so I'd think it would get FIRB approval,” said Neil Boyd-Clark, portfolio manager at Fortis Investment Partners.
Reuters
