China's Valin raises stake in Australian Fortescue Metals
09 March 2009
Fortescue Metals Group, the Australian iron ore mining company with substantial holdings in the Pilbara region of Western Australia, said today that it raise an additional $56 million from China's Hunan Valin Iron and Steel Group Company through a share issue.
This announcement comes after the Perth-based miner had already raised $770 million through Valin last month (See: China invests heavily in Australian miner-Fortescue) and if the deal is approved by the Australian Foreign Investment Review Board, Valin's stake in Fortescue will go up to 17.4 per cent.
After the Chinese steel maker invested $770 million for a 16.5-per-cent stake in the Australian iron ore miner last month, it gave a stand-still agreement, where it undertook to hold no more than 17.5 per cent of Fortescue Metals.
The new shares will be issued at A$2.48 per share, which is the same price Valin paid for the earlier stake.
Led by one of Australia's richest men, Andrew Forrest, Fortescue Metals Group said in a statement, "The funds raised through the Valin placements provide extra strength to Fortescue's balance sheet, and offer a strong financial base for Fortescue to expand above its 55 million tonne per annum production capacity."
The present hike in stake by Valin will the Australian regulators in a tough spot as it is still grappling on the controversial approval of the $19.5 billion investment by another Chinese company Chinalco in Rio Tinto (See: Chinalco invests $19.5 billion in Rio Tinto to raise stake to 18 per cent) as well as the A$2.6 billion takeover offer of OZ Minerals by China Minmetals.