the below is an article re Chinese financial support of...

the below is an article re Chinese financial support of Australian mining projects.

it relates to the support of Chinese entities in funding the development of mining projects, in lieu of support from banks and other funding options.
It points to the fact that the Chinese are still desperate to secure long term secure supply sources, and how vital these supply sources are "to that nation's ongoing industrialisation and urbanisation."

So my point here is that if we think metals are so important, just how important is energy supply "to that nation's ongoing industrialisation and urbanisation."?????

Here we have Petro "withdrawing" "because the general situation in Australia has changed so much".

It seems pretty clear that the only reason for the cessation in formal negotiations is because Petro could not make up their bloody minds!
And in fact that indecision seems to be related more to their investment imbroglio in Arrow, rather than such a small investment in WCL.

Importantly as we have commented here on HC before, all those reasons why WCL is such a natural fit for Petro/LNG/HQC simply STILL make sense.

Blind Freddy can see that LNG are in no position to fund the development of F/L, nor are they a credible counter-party to execute a GSA with anyone.

However, HQC or Petro are.

If one reads the article below, it seems MMG is the Chinese investor in the Aust project, and it is they who are arranging funding of the development through China Development bank Corp. I know nothing of Rex Minerals.

Note how the article says "The key driver for it in the deal is the sale of mining equipment to the project."

HQC were to supply the entire plant for F/L, construct the plant in 5 modules in China, and ship it to F/L. Their modulular design was to be replicated by them in other LNG projects all around the world. Probably firstly in F/L and then basis for Magnolia project in USA.

So MMG is an investor in the project, it is a supplier of capital equipment to the project, it (or the Chinese) are offtake parties of the production, it arranges funding, and the commodity is a vital ingredient to the Chinese economy !

So the point is, why wouldn't something similar apply to HQC?

HQC has a big equity investment in LNG Ltd, has a co-MD, has board position, has invested $m in design, engineering for construction, has "face" invested in project, has Chinese parties keen to acquire LNG offtake, would have a $B balance sheet, is closely related to Petro, and commodity is vital LNG supply. Also WCL and Mitsui gas would get F/L underway, to at least commissioning, and MPO assets would then not be isolated, and all those other MPO permits such as Timmy, Harcourt etc close by plus Paranui, could all be developed quickly to supply further gas to F/L.

Whilst Petro has "withdrawn", there is nothing to prevent them returning, OR nothing to prevent HQC arranging funding itself, and progressing the development of F/L.

Clearly to me, the LNG OSMR technology must be credible, otherwise the Chinese simply would not have invested such time and money if engineering design and costing.

cheers

*********************************************8

China affirms appetite for metals with $1.55bn in local mine deals

by:Barry Fitzgerald
From:The Australian
June 05, 201312:00AM

CHINA is backing up its status as the world's biggest consumer of metals by becoming the lead financier to new Australian mines, with more than $US1.5 billion ($1.55bn) now being committed to projects Beijing wants to see developed to ensure a diverse and long-term supply of metals vital to that nation's ongoing industrialisation and urbanisation.

While traditional financiers for Australian projects in Europe and the US have retreated from the sector, and equity markets have been closed off as a source of ready funding, China's network of state-controlled development banks, mining companies and engineering and construction groups are taking up the slack.

ASX-listed Rex Minerals yesterday became the latest beneficiary, with the group signing a financing and engineering/construction memo of understanding under which Chinese interests will facilitate $US550 million in debt funding for the likely $US800m cost of developing its Hillside copper project on South Australia's Yorke Peninsula.

This comes as Melbourne-based and Chinese-controlled MMG works towards finalising, by month's end, a proposal from state-controlled China Development Bank Corp to arrange and underwrite $US1bn in financing for the $US1.5bn development of MMG's Dugald River zinc mine in Queensland.

Rex shares shot up 13.5c, or 54 per cent, to 38.5c on news of the China agreement. But the stock remains well short of the 94c a share it commanded in November last year before concerns became entrenched about how it would finance the Hillside development in the face of deteriorating equity and commodities.

That it has been able to secure the support of Chinese interests has come as no surprise to Rex chief executive Mark Parry. He said that while there was a lot of money in the major capital markets looking to be invested, it was a trait of western world markets that "people tend to be very short-term-driven, and that any adverse news forces a sell mentality".

"But the market in China tends to be more long-term thinking. It is looking to secure offtake of critical commodities, so you get a far better hearing there," Mr Parry said.

"Hillside is like an option in the ground, one capable of generating 600 jobs in construction and in operation, plus tens of millions, if not hundreds of millions of dollars in taxes and royalties. That option can only be realised if somebody underwrites it or finances it. And at the moment, the people most likely to do that are the Chinese."

Mr Parry said that non-Chinese interest in copper -- particularly in the right sort of political environment, like Hillside -- was still strong, and that Rex would seek to tap that interest to provide the balance of funding for the Hillside development. Mr Parry said the China deal gave Rex greater certainty about the timing and quantum of debt funding.

The (non-binding) memorandum signed by Rex has China Nonferrous Metal Industry's Foreign Engineering and Construction Co (NFC) taking the lead role on facilitating the $US550m in debt financing with Chinese banks.The key driver for it in the deal is the sale of mining equipment to the project. Perth-based mining engineering and construction group Arccon is the subcontractor to NFC.

Baillieu Holst told clients the memo was a start towards solving the funding puzzle for Hillside. The signing of the engineering procurement and construction contract and financing term sheets is expected in September. Rex tips a start to construction in the first half of next year.


http://www.theaustralian.com.au/business/mining-energy/china-affirms-appetite-for-metals-with-155bn-in-local-mine-deals/story-e6frg9df-1226657336518