mitsubishi to seek china's help post-buyout

Mitsubishi eyes Oakajee selldown to China after buying Murchison's share

by: Andrew Burrell
From: The Australian
November 24, 2011 2:02PM

JAPANESE corporate giant Mitsubishi will attempt to sell a major stake in the $5.94 billion Oakajee port and rail project in Western Australia to Chinese interests after unveiling a deal to buy Murchison Metals' share of the troubled development.

Murchison managing director Greg Martin said Mitsubishi had indicated it would attempt to sell down its 100 per cent stakes in both Oakajee and the Jack Hills iron ore mine in Western Australia's Mid-West region, assuming the deal is ratified by Murchison shareholders early next year.

Murchison announced today it would sell its 50 per cent stakes in the two projects to Mitsubishi for $325 million. The troubled Perth miner has been reviewing its options after in July admitting it could not fund its share of the two projects, which are worth a combined $10 billion.

Mitsubishi owns 50 per cent of Oakajee Port and Rail and Jack Hills.

Mitsubishi has said it was prepared to talk to China, which is a major investor in the mines of the Mid-West but has been locked out of playing a role in developing the infrastructure, Mr Martin said.

China's sovereign wealth fund, China Investment Corp, is conducting due diligence on Oakajee and is expected to decide whether to invest in the project within months.

A China-Japan deal could pave the way for the Oakajee infrastructure to be built following major cost blowouts and delays. This would open up the Mid-West region as Australia’s next iron ore province.

The cash offer was lobbed by Mitsubishi last Friday night and was signed in Perth this morning. But Mr Martin said Murchison would continue to entertain any proposal from rival parties, either at the asset or corporate level.

By early afternoon, Murchison shares had soared 50 per cent to 41.5c.

Murchison said today it would have no exposure to the risks associated with developing Oakajee or Jack Hills if the transaction proceeded.

The deal is subject to approval by Murchison shareholders in February.

http://www.theaustralian.com.au/business/mining-energy/mitsubishi-eyes-oakajee-selldown-to-china-after-buying-murchisons-share/story-e6frg9df-1226204829415