Chinese infrastructure giant in hunt for RMA.Sarah-Jane Tasker |...

Chinese infrastructure giant in hunt for RMA.

Sarah-Jane Tasker | September 04, 2009
Article from: The Australian.

CHINA'S largest infrastructure group has made its first strategic play in Australia, releasing its formal bid for RMA Energy, as it eyes further investments in the region.

China Railway Resources Group's Australian subsidiary, CREC Resources, has made a $14.8 million bid for 80per cent of Perth-based RMA Energy as its first venture in the Australian resources space.

The Chinese giant, the third largest construction company in the world, set up the Australian subsidiary about a year ago with a view to using the vehicle to target Australian acquisitions.

It is said to be pushing for only 80 per cent as it wants some local support on the ground and to be confident of passing the regulatory hurdle of the Foreign Investment Review Board.

RMA Energy has tenements in Queensland, including uranium, tin, coal and base metals, but it has not released any spectacular results to generate wide interest in the $15m company, leading industry sources to suggest China's move on the minnow is purely a strategic play.

One insider said the transaction was merely a starting point for the major infrastructure group's involvement in the Australia's resources sector, with it expected to use its financial muscle to target other projects.

State-owned China Rail's push to expand into resources was flagged last month by its chief financial officer, Li Jiansheng, who told Chinese media the company's business could shrink if it did not develop overseas once the stimulus packages were finished.

Ms Li said CREC may continue to acquire mining assets in Australia.

"China Railway Resources is a mining company. If it doesn't acquire mining assets, how can it function?" she said at the time. The move adds to the increasing focus from a growing list of state-owned companies targeting Australian miners, which has not diminished despite the recent diplomatic tensions between the two countries.

"They are a construction company but have the skill sets and they want to apply those more broadly," a source close to the deal said. In the bidder's statement CREC said its parent, China Rail, would loan it the funds needed to complete the transaction.

The deal, an offer of 6.5c a share, will hinge on the major shareholder, Queensland business identity Terry Byrt, who has a 42.9 per cent stake in the company.

Industry sources said it was expected that Mr Byrt would roll his stake into the bid. RMA Energy said yesterday that on August 10 CREC Resources, which has a 11.18 per cent interest in the company, had announced an intention to make a proportional takeover offer for the Queensland-focused junior.

"The announcement from CREC was unsolicited and upon receipt of the notice caused RMA's board to immediately respond by advising RMA shareholders to take no action," the company said.

After the formal bid was lodged the junior said it reaffirmed its previous advice to take no action.

"The RMA board welcomes the interest in the company and its assets, however at this time shareholders should take no action in relation to the CREC offer on receipt of the bidder's statement," the company said.