Hey guys, I haven't spoke to the company myself but I did hear from someone else back in Sep that management were confident of approval early Oct. Whether or not that was true, China's attacks on our trade and wolf warrior wankery escalated big time since beginning of Oct as we know. There seems little doubt that under such a bitter diplomatic stoush, Canberra does not want to lose face by approving Yansteel JV within days of the last punch in the mouth. Canberra doesn't want to be seen as looking weak and kowtowing to economic coercion, imo they need enough time after the last punch was thrown so that Yansteel FIRB approval can be seen as 'rules based', country agnostic decision that proves there is no ill-will or Chinese prejudice when an investment satisfies the criteria.
There can be no argument that a private Chinese, HK listed company buying into only 50% of a project, without any direct control or influence outside a JV committee overseeing the project, breaches FIRB criteria imo. I won;t list them here, but everything about this JV deal is what the government is chasing to see development of regional projects that otherwise might sit idle with no jobs, royalties, taxes, flow-on benefits etc. So we wait for Frydenberg's approval of FIRB's recommendation, which is political and whose timing depends on the tactical implications of the announcement within the greater game being played.
Frydenberg made a huge mistake rejecting FIRB's recommended approval for the Lions Dairy Chinses TO imo. He thought it was not important because there was no associated development or jobs benefit to the sale of an existing business and thus this was a good opportunity to push back at China's early trade attacks (ie Coal) to show we are a sovereign country who picks and chooses what investments it allows. That trade/investment games can be a two way street. I doubt it crossed his mind that move with other missteps would poke the bear into an all out trade war. China is right to feel affronted that a non-strategic and quite normal private business sale, approved by FIRB, was over-ruled and scuppered simply because the buyer was Chinese...
My position remains that there is no reason for FIRB not to approve the Yansteel JV. It ticks all the boxes for investment, development and everything good that flows on form it. Approval is also critical imo to take the high moral ground back after the Lion Dairy F-up by showing China and the world we welcome investment that meets country agnostic criteria and accusations we are prejudice against Chinese investment just because they are Chinese is false. The risk is not that FIRB or Frydenberg rejects Yansteel's investment, but that they take so long and the diplomatic fissure seems to get so wide Yansteel decide discretion is the better part of valour and walk.
Bmwgirl has cause to rattle our cage on the risk this deal falls over, a risk clearly reflected in a large share price discount to $150M investment and the JV up an running. That poster's claim FIRB approval will be denied is barking up the wrong tree as usual. Frydenberg has already shot us in the foot by over-ruling FIRB on Lion's Dairy, can't see him shooting us in the other by over-ruling FIRB again just to escalate the fight with China... makes zero sense. The real risk is Frydenberg drags things out so long playing Canberra's tactical diplomatic game towards domestic and international audiences, that Yansteel eventually get cold feet and just walk.
Assuming Canberra is not completely deaf to time and commercial reality, if China can lay off for another week the lull in fighting might suit getting on the front foot and delivering us long suffering an early Xmas FIRB present. Share price support above 30c shows insiders are still confident despite incredibly bad optics last month or so. Government shuts down for a while over Xmas break, if they delay until into the new year that would be annoying and a mistake imo, but who knows what goes on in the corridors of power? Trump proved politics and rationality can be two completely different things....
SFX Price at posting:
32.0¢ Sentiment: None Disclosure: Held
(20min delay)