For those who are CONSIDERING investing in CXM, but are...

For those who are CONSIDERING investing in CXM, but are concerned about whether or not FIRB approval is going to be granted, for both the WISCO and Baosteel deals, this article may be of interest:

http://www.freehills.com/4952.aspx

It relates to steps the Federal Government took in relation to the OZ Minerals/Minmetals case, and the investment in Fortescue.

In both cases (which involve much greater dollar amounts, and more strategically important resources), FIRB approval was granted. In these cases however, the Federal Government put some conditions on the FIRB acceptance. These conditions include:

"•ensure pricing occurs on an arm’s-length basis and in line with market practice" and other conditions that would be expected, and are not onerous. (full details in the article.

The conclusions drawn by the authors of the article are that whilst the Government will make sure any investments are in the national interest, "FIRB may be willing to work with applicants in order to overcome any concerns FIRB may have."

The bottom line in relation to CXM is that, whilst neither the $186m WISCO deal (due any time), or the Baosteel deal (due in a month or so) have been approved YET, it is HIGHLY UNLIKELY either would be rejected outright. And further, that any conditions imposed by FIRB, such as the Chinese not having influence over price negotiations, are not going to be harmful to CXM.

I understand those who would prefer to wait for the ink to dry on these big value deals before investing. Personally, I am comfortable buying now before the formal announcements, as I suspect the price will be much higher once the ink has dried.

Y