from spectacular potential to ???, page-22

Any one can sign an MOU with the Chinese.

I have been to many MOU signing ceremonies and most of them are 1 page documentat saying we have an MOU and the detail say basically they agree to talk further.

CTO has previously signed MOU's that never materialised into reality eg. Dubai. This MOU/relationship ended with a one liner buried in the last paragraph of a quarterly report.

The lack of detail in the announcement, makes me assume that there is nothing more than the parties are willing to talk further or otherwise they would have disclosed this as part of their continuous disclosure obligations.

Well they haven't and yes I am a little sceptical as they are in the middle of an SPP and like last time there was a SPP they came out and made a glowing announcement on how comfortable the CEO was with the production forecasts.

Sounds a little to convenient to me....hence why I asked for more detail.


Have a read of the article from the Australian on this exact topic.


Tell China we deal from different deck
Sarah-Jane Tasker From: The Australian February 15, 2010

WHEN is a deal not a deal? It's a question being asked with repeated frequency as China continues its push into the Western world. And it's one the economic powerhouse itself is beginning to address.

Norton Rose partner Ian McCubbin, who specialises in Sino-Australian investment, said China's SASAC -- the State-owned Assets Supervision and Administration Commission -- is concerned that an unacceptably high proportion of global investments by China do not achieve the objectives they set out to achieve.

"The chairman of SASAC has previously been asked what is the greatest challenge facing state-owned enterprises when they invest outside China and he said legal risk," Mr McCubbin, who recently returned from speaking at a SASAC conference in Beijing, said.

"The Chinese parties don't understand in sufficient depth the different legal systems to which they are exposed when they invest outside China."

The issue around the clarity of contracts with Chinese parties was put firmly in the spotlight last week after mining billionaire Clive Palmer had to water down his announcement of a $US60 billion ($69bn) coal contract with the giant Asian nation.

Mr Palmer, along with Queensland Premier Anna Bligh, had boasted the contract with China Power International Holding was Australia's biggest export contract but the state-owned company said it was only a "framework agreement", with details, including price, yet to be finalised. The mining entrepreneur also had to correct the name of the company he was dealing with for the supply of 30 million tonnes per annum of coal over the next 20 years from the Galilee Basin in central Queensland.

He had originally said it was with China Power International Development, a listed company on the Hong Kong Stock Exchange, but it was actually with China Power International Holding, a Chinese government-owned enterprise based in Beijing. Industry insiders said the confusion around Mr Palmer's agreement with the Chinese was similar to the recent Australian Securities & Investments Commission's case against Fortescue's Andrew "Twiggy" Forrest.

The corporate watchdog lost its battle to prove Mr Forrest and Fortescue had misled the market about the status of deals signed in 2004 with Chinese companies. Linda Liu Bearne, an investment consultant whose clients include China International Capital Corporation, China's largest investment bank, said framework agreements were not binding contracts in China.

"China are very serious about that. A contract needs to be signed by the president at the right level," she said.

One Chinese-focused lawyer said uncertainties over deals were created because of the different views about what is and is not legally binding when deals are agreed on.

He said the Chinese might deem a deal to be binding in principle but not in the legal sense and will take the view they can walk away from it if it is not legally binding.

"A lot of the approvals processes for these deals involves money that comes out of China, so there is the view that these Chinese companies will sign up anything, but drop in a condition that it is subject to certain approvals," he said.

"But essentially, they can control those approvals, because you are dealing with state-owned enterprises and they are in close contact with Chinese authorities and, in theory, will know before entering deals if they will get the necessary approvals."

Mc McCubbin said in general, when overseas companies were doing deals with China, the parties sometimes did not reach a common intent.

"The problems arise because Chinese companies approach contracts in a different way," he said. "They approach them as a statement of the parties' intention at the time and they regard the contracts more as milestones along the road, which is the development of the relationship between the parties."

He said the scope for misunderstanding with China was enormous and when deals failed, it was generally because of a failure of the parties to come to a common intent.