swan blocks chinese takeover of oz mine, page-65

The press reports are almost uniformly treating this decision, and Swan, with the open contempt it deserves:

Article from: The Australian

Swan's misfire awful timing for OZ Minerals China deal
MARTIN COLLINS: John Durie March 28, 2009

FEDERAL Treasurer Wayne Swan went to extraordinary lengths not to make a ruling on Chinese investment in Australia's resources industry by partially knocking back the OZ Minerals deal.

His excuse was as lame as they get: the Chinese rescue could not include the Prominent Hill copper and gold mine because it was too close to the defence facility at Woomera in South Australia.

The mine is 162km from the facility and to define it as being of strategic importance is a stretch of extraordinary proportions.

If China or anyone wanted to spy on Woomera, and few would, all you would need to do would be to log on to Google Earth rather than pay more than $4 billion to buy a gold and copper mine.

Swan's timing could not be worse for OZ, coming just days after FIRB said it would need another 90 days to make its decision, and just three days before the company needs to appeal to its bankers for an extension of their debt facilities.

For a Government that boasts about its good work in helping the country through the recession, this decision says the exact opposite.

The folks at Rio Tinto will now be busily firming out options B, C and D because, based on the nonsense trotted out by Swan yesterday, they can have no confidence in getting approval for their Chinalco deal.

Prominent Hill is the prized OZ Minerals asset and the main reason anyone would be interested in spending $4 billion to keep OZ out of the liquidator's hands.

By excluding the mine for strategic defence reasons, Swan effectively killed the deal without actually having to make a decision himself. Instead, Swan has found a way to sidestep a difficult policy issue.

He had options: after all, Minmetals wanted 100 per cent of the company and he has previously shied away from approving such deals.

Rio is a bigger company, but Chinalco is only seeking increased minority control. This meant Swan could distinguish between the two. He could have laid down firm policy that everyone could understand, but such transparency is every politician's worst nightmare.

This shows that Chinese companies like Chinalco face a tough time. Swan can play by whatever rules he likes.

Minmetals says it is continuing to discuss options, but with Prominent Hill off the agenda, OZ Minerals' survival chances have slumped. BHP is said to have not even done due diligence on the deal, but may look now.

Others, like Barrack, have already taken a look. It's a Canadian company, and BHP is foreign-controlled, so that would leave Swan in a difficult position: knocking back the Chinese for defence reasons and letting another foreigner through the door.

Swan's non-decision has made an already murky part of Government even murkier.