chinas shougang has mt gibson bid blocked

From The S.M.H.

China's Shougang has Mt Gibson bid blocked

Chinese steel maker Shougang has been thwarted in its apparent attempt to gain control of Mount Gibson Iron Ore.

This follows the Takeovers Panel today blocking Gazmetall Holdings Cyprus from selling its stake to Shougang over concerns the Chinese group could have gained control without making a takeover offer.

Iron ore producer Mount Gibson approached the Takeovers Panel to prevent the sale of Gazmetall's 19.72% stake to Shougang after questions were raised about the steel maker's relationship with major shareholder APAC Resources.

Shares in the company lost four cents to close at $2.83.

Shougang holds an 18% interest in Hong Kong-based APAC - which owns 20.19% of Mount Gibson - and the two Chinese groups share a chairman, Cao Zhong.

The sale of the stake by Gazmetall, a Russian iron and steel producer, sparked speculation that the transaction was designed to gain control of Mount Gibson without making a takeover offer for the company.

The Takeovers Panel announced today its ruling that there was a relationship between Shougang and APAC and that there would be an ''unacceptable effect on the control or potential control'' of Mount Gibson if Shougang acquired Gazmetall's stake.

The panel has made final orders cancelling the contracts that would have effected the proposed transaction between Gazmetall, which is controlled by Russian billionaires Alisher Usmanov and Vasiliy Ansimov, and Shougang.

Mount Gibson managing director Luke Tonkin was unavailable for comment but the company said in a statement it was pleased that its ``serious concerns'' had been addressed.

Mount Gibson operates the Tallering Peak mine 175 kilometres east of Geraldton and the Koolan Island mine off the Kimberley coast in Western Australia.

The company is expected to produce more than six million tonnes of iron ore this financial year.

Chinese steelmakers and commodity traders are keen to cut dependence on Rio Tinto Ltd and BHP Billiton Ltd amid rising prices for the bulk commodity and have been forming joint ventures with junior iron ore companies.

Sinosteel Corporation, China's largest iron ore trader, has gone one better and launched a $1.2 billion hostile bid for WA iron ore miner Midwest Corporation.

UBS said in a March 31 client note that the Sinosteel offer ''clearly signals that China is looking to secure iron ore supply expecting continued tightness in the market''.