Australia puts Chinese firms' mining takeovers on hold

The Australian Foreign Investment Review Board (FIRB) has decided to extend its review of China Minmetals' $1.8-billion offer to acquire OZ Minerals, the world's second-biggest zinc miner, by 90 days, ie, till 22 June.

The FIRB also decided to probe three other Chinese firms' investments in the country's mining firms just a week after a similar extension was granted to review Aluminum Corp of China's (Chinalco's) $19.5-billion investment in mining giant Rio Tinto (See: EU regulators file objections to BHP - Rio Tinto merger /  Rio Tinto mulls multibillion infusion from Chinalco; $6 billion issue)and Hunan Valin Iron & Steel's proposed acquisition of 16.5 per cent stake worth $645 million in iron ore producer Fortescue Metals Group.(See: China's Valin raises stake in Australian Fortescue Metals)

FIRB also asked another Chinese company, Anshan Iron & Steel Group to resubmit its application to invest $112 million in Gindalbie Metals, a Western Australian iron ore producer.

The Australian government is concerned about China's growing presence in the Australian resources sector and apprehend that Chinese state-owned entities would become 100 per cent owners, or wield control over Australian resources assets.

The government has put a hold on taking any decision on these transactions till it formulates some sort of comprehensive policy on whether Australia is open or not to such complete takeover of its assets by Chinese state-owned entities.

More than a year ago, Wayne Swan's first re-statement of the foreign investment guidelines contained specific references to investments by state-owned enterprises and sovereign wealth funds. FIRB and the Federal Government have been deliberating about these issues.