Murchison Metals, Mitsubishi, POSCO While Western Australian...

Murchison Metals, Mitsubishi, POSCO

While Western Australian Premier Colin Barnett might be contemplating some high-fives with Murchison Metals managing director Greg Martin, the $5.9 billion Oakajee Port & Rail project saga isn’t over by a long shot. Murchison’s joint-venture partner Mitsubishi, the Japanese trading giant, lobbed a very generous $325 million cash offer for the other 50 per cent stake in the Oakajee project and the accompanying Jacks Hill iron ore mine. The move was seen as a surprise by many as Mitsubishi hadn’t made any indication that it wanted the project for itself.

In a statement, Mitsubishi said it intends to introduce a “suitably capitalised partner” to take up the stakes in Oakajee and the mine. But who? Reuters reports that South Korea investment house POSCO, a major shareholder in Murchison and mooted interested party in Oakajee itself, has already throw its support behind the Mitsubishi deal. Meanwhile, The Australian reports comments from Martin that Chinese companies have already been through its data room. Beijing indicated that mega sovereign wealth fund China Investment Corporation must conduct due diligence, so this scenario would allow CIC to have a closer look at Oakajee, rather than deal with Murchsion, which was short on time. Advising Mitsubishi through this has been Macquarie Capital and Mallesons Stephen Jaques.

There are, however, three things standing between Mitsubishi and the remaining 50 per cent of Oakajee. First is the Murchison shareholder vote, although this shouldn’t be a problem given that the stock rocketed over 50 per cent on the deal. While it remains open to superior offers, those parties could just as easily take their time dealing with Mitsubishi. Second is the Foreign Investment Review Board, but there hasn’t been a suggestion so far that FIRB would have a problem. Third is Chameleon Mining, which is currently engaged in a legal battle with Murchison. As part of the deal, Murchison has to resolve the dispute by December 23, which is less than a month away. Chameleon noted the timeframe but hinted that it won’t be rushed during settlement. That sounds like leverage.