Australia blocks China’s bid for Oz Minerals

The Australian government feels that China’s bid for South Australian gold and copper mine might prove risky for the country’s security.

At least, this is how Australian treasurer Wayne Swan feels about the Chinese bid. Prominent Hill gold and copper mine is situated near 162 km from the Australian defense facility at Woomera in South Australia.

“OZ Minerals' Prominent Hill mining operations are situated in the Woomera Prohibited Area in South Australia. The Woomera Prohibited Area weapons testing range makes a unique and sensitive contribution to Australia's national defence,” asserted Mr. Swan.

Wayne Swan stated that he will take into consideration a few “alternative proposals” from the China’s metals group in Beijing except the Oz Minerals gold and copper mine. The decision by Swan has put a question mark on the controversial developments involving an investment deal worth $19.5 billion by an Anglo-Australian mining group- Chinalco in Rio Tinto.

This decision of Swan is surprising a few people. “This [Oz Minerals] decision has come as a surprise to many and is likely to change the dynamic of Chinese investment in to Australia. Canberra is not the push-over some thought it might be,” exclaimed a dealmaker.

Meanwhile, the country’s Foreign Investment Review Board (FIRB) is examining the deal by Oz Minerals and a few others including Chinalco-Rio and a deal worth AUD $1.2 billon investment in Fortescue Metals, which is on the cards. Fortescue Metals happens to be the third largest iron ore group in Australia.

While Oz Minerals said it hoped to strike a deal with Minmetals, the Chinese metal group, which is having a word with FIRB, laid bare its concerns, saying, “Our focus is on delivering an agreed solution to Oz Minerals that meets national interests, can satisfy lenders, deliver stability to employees and protect existing operations.”

The Australian government’s vague decision has received severe criticism from various quarters of the world. WTO (World Trade Organization) has lashed out against Australia’s blocking of Oz bid on flimsy grounds. It said the decision could jeopardize country’s international trade.

It is being said that the distance between Prominent Hill gold and copper mine and the “sensitive” weapons testing range was at least 150 km.

The move by Australian Treasurer has raised serious concern over Chinese investment in Australia. A banker based in Hong-Kong said, “We thought that the Chinese-Australia investment trend was only going to increase in the coming months but now we can't be so sure.”

The deputy chief executive of steel giant Shougang, Jian Xinghong, feels that increased investment by China is a vital step towards globalization. Shougang has a 40 percent stake in Mount Gibson Iron, a Western Australian iron ore miner.

Jian Xinghong said, “We have several partnerships with Australian companies. We have learnt a lot, we've got back a lot back. Everybody's happy. During the financial crisis, it is very important to cooperate. We are a very large company, we think in terms of human resources, technology and mining. There are a lot of investment opportunities.”