Gindalbie Metals/Anshan Iron & Steel Group. Chinese group Anshan has lifted its stake in junior iron ore explorer Gindalbie Metals to about 36%. What we’re seeing is big Chinese groups taking strategic stakes in small Australian miners. It’s good for the Chinese companies: they get to secure sources of supply. I would say in the long run, however, it’s bad for minority shareholders, because it pretty much stops other bids happening.
Another thing is that it is almost certain that these large Chinese shareholders will seek to get preferential pricing on their offtake agreements, and as larger shareholders they’ll be in a position to do that. Now, there is a conflict of interest there, but, who’s going to stop them?
In the short term, these companies like Gindalbie need these shareholders and these contracts. But longer term, I think it’s going to be detrimental for their profitability. It will stop them from supplying into other markets and to other buyers.
GBG Price at posting:
42.8¢ Sentiment: LT Buy Disclosure: Held
