The decision to exclude the Chinese from the original Oakajee Port & Rail agreement has come back to haunt Murchison Metals. Regardless of whether a Chinese-backed player like Gindalbie Metals takes Murchison’s 50 per cent stake in the project, having a less strategically aligned partner in Japan’s Mitsubishi hasn’t helped things much. Today is Centro’s date with destiny, or at least with its shareholders, who will decide whether to approved its $3 billion restructure. Meanwhile, Kerry Stokes has offered National Hire’s Dale Elphinstone a sweetener to get the Tasmanian’s 22 per cent stake, iNova Pharmaceutical’s private equity owners have finally offloaded the business after two years and Robert Millner doesn’t want anyone interfering with the sale of New Hope and has urged shareholders not to let an independent onto the Soul Patts board.
Murchison Metals
Murchison Metals has managed to get someone to talk to about its 50 per cent stakes in the $5.9 billion Oakajee Port & Rail project and Jack Hills iron ore mine. The question is, to whom are they talking? The company has entered into a trading halt, saying that it will make an announcement about a potential transaction when it’s got something to go on. Recent speculation that China-backed Gindalbie Metals is a likely party appears to be fading, as the company already has the $2.7 billion Karara iron ore project to deal with.
The most basic question is whether China has the appetite to bid for a 50 per cent stake in a project it was originally excluded from – Japan’s largest trading house, Mitsubishi, took the other 50 per cent and it’s not likely to take the other half. Some have pointed to China Investment Corporation but authorities in Beijing have instructed them to conduct due diligence, raising doubt about their confidence in the venture.
There’s a case to be made that South Korea’s POSCO could pair up with Mitsubishi, as they’ve already got a supply agreement for Jack Hills. Whatever the case, Murchison needs to do a deal. Its share price has sunk 78 per cent this year against a 12 per cent decline on the benchmark index.
GBG Price at posting:
51.5¢ Sentiment: Buy Disclosure: Held
