mt gibson next on chinese steel radar Mt Gibson next on Chinese...

mt gibson next on chinese steel radar Mt Gibson next on Chinese steel radar
3rd November 2006, 9:00 WST


Mid-West iron ore miner Mt Gibson Iron is the latest WA company in the crosshairs of China’s ravenous steel makers, with a key stake in the group potentially up for grabs.



UK-based Cambrian Mining confirmed yesterday it would decide on the fate of its effective 14 per cent stake in the Mid-West miner over the next few days.

The move comes against the backdrop of Chinese group Shougang Steel’s purchase of shares in both Mt Gibson and its takeover target, fellow WA company Aztec Resources.

The dealings are the latest in a wave of Chinese investment in WA’s junior iron ore sector and comes ahead of the resumption of annual price talks tipped to deliver another round of price increases next year.

Mt Gibson’s one-for-three bid for Aztec is due to close today, and any acceptances from Shougang-linked parties could snare it board control.

But success may also deliver significant influence over Mt Gibson to Chinese interests, particularly if the Cambrian stake in Mt Gibson comes into play.

Cambrian chief John Byrne, who put Aztec in play by committing its 32 per cent stake to Mt Gibson, said Cambrian had “a board meeting in the next couple of days and we’ll be examining our position”.

“We’re not a (passive) ... holder, that’s for sure, so we’ll make some decisions.”

Mr Byrne said there was a “compelling argument” for Mt Gibson and Aztec to be combined, and that the enlarged group would itself be a target.

“I think what will happen is it will be in play — if we don’t go, someone else is going to go for it, it’s that simple,” he said. “We are always open to proposals, though we have not had any approach at this stage.”

Shougang-backed Shanghai Merchant Holdings on Tuesday snapped up 6.5 per cent of Aztec at the same time as it acquired 10.6 per cent of Mt Gibson at 85¢ a share from COL Capital, a Hong Kong firm linked to billionaire Lee Ming Tee.

A further swag of Aztec shares are also believed to have come under the control of potentially bid-friendly parties with China connections.

Aztec said Shanghai Merchant had indicated “strong support” for the company, but market sources yesterday said Shougang was eyeing the bid as a means of gaining sway over the enlarged Mt Gibson group.

Mt Gibson chief Luke Tonkin last night conceded that was possible if the Aztec bid succeeded.

“It will be interesting to see how it all transpires,” he said. “The issue there is it’s an open register and you can’t — and shouldn’t — pick your shareholders.

“If there is a play afoot, then eventually it will come to a premium in the shareprice — so I think we’re in a reasonable position.”

Chinese steel groups have been aggressive investors in WA’s iron ore juniors over the past year. Hong Kong groups Citic Pacific and Sinom have acquired control of the Cape Preston and Extension Hill magnetite projects respectively, AnSteel is partnering Gindalbie Metals at the Karara iron ore project, while Sino-Steel has teamed with Midwest Corp for the Weld Range and Koolanooka projects in the Mid-West.

JOHN PHACEAS