Australia rejects another Chinese investment
25 Sep 2009
A day after the Australian government rejecting China's Wuhan Iron and Steel's proposal to take a 50-per cent stake in Western Plains Resources' iron ore mine, (See: Australia rejects large mining deal with China) the country's foreign investment regulator has now put the brakes on another state-owned Chinese company's plans to take a 51.6-per cent stake in an Australian rare earths mining company.
Sennding a clear signal to China's state-owned companies that Australian natural resources are not for grabs, the Foreign Investment Review Board in Australia (FIRB) has asked the state-owned China Nonferrous Metal Mining Co (CNMC) to reduce its proposed stake from 51.6 per cent to below 50 per cent in Australia's rare earth mining company, Lynas Corporation.
The regulator has also asked CNMC to reduce the proposed number of board seats to half.
China reacted immediately yesterday by cancelling the whole deal as it refused to accept a lower stake.
CNMC had offered Lynas $438.5 million in cash for a majority 51.6-per cent stake in May, saying it would stand guarantee to a Chinese bank for two loans of $104 million and $80 million to Lynas.
According to deal, the running of the company was to be governed by a contractual agreement, and CNMC would have the right to appoint 4 of its directors on the 8-person Lynas board with a ninth vote being held by CEO Nicholas Curtis.
