firb looks to cap foreign resource investment

FIRB looks to cap foreign resource investment
29 September 2009 | by Paul Hayes

The Foreign Investment Review Board (FIRB) has suggested plans to limit foreign investment in Australian mining companies to 15% in light of thawing commodity prices and a strengthening resource market.

Speaking at a Chinese investment forum in Sydney last week, FIRB general manager Patrick Colmer said the Federal Government would ultimately prefer partnerships with Australian companies instead of takeovers.

“Our Government has expressed a preference for projects that are joint projects in various forms,” he said.
“In particular, we are much more comfortable when we see investments that are below 50% for greenfield and around 15% for major producers.” Such a cap on foreign investment in Australian mining companies could potentially cloud a number of pending investments, notably China’s State-owned Yanzhou Coal Mining Company’s 100% US$3.3 billion takeover of coal miner Felix Resources.

According to resource analyst Andrew Harrington of Patersons Securities, while Colmer’s comments are unlikely to derail the Yanzhou – Felix deal, that has as much to do with its timing as anything else.

“Yanzhou had had plenty of time to come and negotiate the price, but also get at least some indication from the authorities that there was not going to be a problem,” he told MINING DAILY. “They came out and bid for the whole of the company, which they would not have done without some indication that the deal would get through. “Before the 15% announcement I was almost certain that the takeover would happen. I am now less certain, but I still think it is likely.”

Felix Resources would not comment on any potential effects on the Yanzhou deal when contacted by MINING DAILY.
According to Colmer, FIRB recognises the importance of foreign investment to the continued development of the mining industry, but will work to ensure those investments are in the country’s best interest.

“We are concerned to see the development of the Australian resources industries,” he said. “But we want to do that in a way that allows us to maintain our position as a reliable supplier of resources to all of our customers.”

http://www.miningaustralia.com.au/Article/FIRB-looks-to-cap-foreign-resource-investment/500199.aspx
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Guodu Securities: New regulation blurs Yanzhou Coal bid
Tue. September 29, 2009

BEIJING, Sep 29, 2009 (Xinhua via COMTEX)

China's largest Australian takeover, a towering three-billion-plus Australian dollar bid by Yanzhou Coal Mining Co. Ltd. (600188.SH; 1171.HK; YZC.NYSE) for coalminer Felix Resources, could go either way since an Australian regulatory official suggested a foreign investment limit.
The regulator said that Chinese and other foreign investors in Australia's major resources companies should limit their proposed stakes to no more than 15 percent to improve their chances of gaining approval.

Meanwhile, director of the Foreign Investment Review Board (FIRB), Patrick Colmer previously stated at an Australia-China investment forum that overseas investors in new projects should keep their investment targets below 50 percent.

Yanzhou Coal previously announced it planned to purchase all of Felix Resources' shares. But the statement sheds doubt over whether approval of the friendly offer would be received. If the deal is blocked, Yanzhou Coal will lose its opportunity to obtain Felix Resources' rich coal reserves and advanced technology. The funds it raised for the bid will also be in vain which will affect the company's future prosperity.

However, the regulation hasn't been officially announced by the government. Analysts at Guodu Securities warned that relevant officials have not yet spoken on the matter, and that investors should take their time considering their prospects.

http://www.tradingmarkets.com/.site/news/Stock%20News/2552216/