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AnSteel gets Gindalbie approval

By Jiang Wei (China Daily)
Updated: 2009-06-24 08:08

Magnetite diamond drilling cores are inspected in this undated Gindalbie Metals Ltd photo. China's AnSteel is planning to increase its stake in the Australian mining company through a share placement. [Agencies]

Anshan Iron & Steel Group (AnSteel), a leading Chinese steelmaker, has got the final go-ahead from the Chinese government for an A$162.06 million ($128.69 million) share placement with Australian iron ore miner Gindalbie Metals Ltd.

It marks the latest success of a Chinese steel mill securing its iron ore supplies through overseas investment.

Gindalbie said in a statement yesterday that the Chinese approval was the final condition required to complete the placement of 190,658,824 shares with Angang Group Hong Kong (Holdings) Limited at A$0.85 per share.

The two companies received approval for the transaction from the Australian Foreign Investment Review Board in May.

Gindalbie and AnSteel will be working to complete the placement procedures within the next seven days, Gindalbie said.

After the share placement, AnSteel will increase it stake in Gindalbie from the previous 12 percent to 36 percent.

Gindalbie said the completion of the share placement would allow it and AnSteel to make final equity contributions of A$143.68 million each to complete the entire A$534 million equity component of the funding package for Gindalbie's Karara Iron Ore Project near Geraldton, in western Australia.

Gindalbie also said the balance of the capital for the Karara project will come through a Project Loan Facility of up to A$1.2 billion from the China Development Bank (CDB).

"It's all systems go for Karara and we are continuing to work very hard to achieve final Ministerial approvals to enable us to be on the ground during the December quarter of this year to begin construction," Gindalbie Managing Director Garret Dixon said in the statement.

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Officials from the Chinese steelmaker were unavailable for comment yesterday.

In order to get the approval from the Australian government, which is key to the deal, AnSteel had agreed on a number of undertakings that would support Australian mining jobs and protect Australia's investment participation in the Chinese resources market.

Since late last year, several Chinese companies have made attempts to acquire overseas assets to cash in on the low resource prices amid the financial crisis. Minmetals, a leading non-ferrous metal company, earlier this month won control over most of the assets of Australian miner OZ Minerals Ltd.

China should reconsider its overall strategy in overseas mergers and acquisitions, an analyst, who declined to be named, told China Daily. "China is inexperienced in accessing the overseas resources. The country is building up national metal reserves while at the same time its companies are bidding for similar assets abroad. These efforts have been pushing up global commodity prices. People should be able to tell whether they are wise moves," he said.