chinese firm abandons plan to buy lynas

September 24, 2009 - 4:59PM
A Chinese company has abandoned plans to take control of the rare-earths explorer Lynas Corporation Ltd after Australian regulators demanded it reduce the scope of the planned transaction.

Lynas said in a statement on Thursday that China Nonferrous Metal Mining (Group) Co Ltd (CNMC) had terminated the proposed $505 million transaction announced in May, whereby it would have taken take a 51.6 per cent stake in the Sydney company.

"As a result of additional undertakings recently sought by the Australian Foreign Investment Review Board (FIRB), CNMC has terminated the CNMC transaction," Lynas said.

"The additional undertakings recently sought by the FIRB included reducing the proposed percentage ownership to be held by CNMC to below 50 per cent and reducing the number of board director positions to be held by CNMC to less than half of the board.

"These were in addition to already agreed undertakings between Lynas and CNMC aimed at ensuring independent director control of all marketing of rare earths products."

Market observers say the deal was an example of China's bid to tighten its grip on the rare earths market.

Almost all of the world's rare earths are produced in China.

Lynas' proposed deal with CNMC came under the spotlight earlier this month after a Chinese official recommended banning rare earths exports to prop-up prices.