merged oxiana zinifex is bigger target

Alex Wilson, Dow Jones Newswires | April 17, 2008

THE entity created by the merger of Oxiana and Zinifex will be a target amid consolidation in mining.

Oxiana chief executive Owen Hegarty said Zinifex (ASX: ZFX: quote) and Oxiana (ASX: OXR: quote) are both attractive takeover targets.

Mr Hegarty was speaking in Melbourne today, after what will likely be his last annual general meeting as chief of the mining operation he likes to call “The Mighty Ox”.

Oxiana shares rose 3 per cent to $3.43 today, and Zinifex put on 3.7 per cent to $10.37. At the same time, the benchmark S&P/ASX200 index gained 1.12 per cent.

"They are targets as individuals now, and it will be a target as a merged entity, no question about that," he told reporters.

"Consolidation is going to continue - there is a resources grab out there by all the major companies."

Mr Hegarty said the merged entity, to be led by Zinifex chief executive Andrew Michelmore, will be more aggressive in looking to diversify into different commodities and expanding into new geographic regions.

Chinese investment in the Australian mining sector would be a continuing trend, Mr Hegarty said, and capital from China would be important in bringing on new sources of supply.

Mr Hegarty said he was not concerned by Beijing’s backing for the Chinese entities investing in Australia, and added that he did not believe they were aiming to influence pricing for commodities.

"Our simple view is that they are looking to make investments, they are looking to capture supply and they are not really looking to get a seat at the table to make major influences over pricing - I don't believe that that's the motive," he said.

Oxiana is applying for exploration licences over prospective iron ore ground in Thailand, and Mr Hegarty said early rock-chip sampling indicated the area contained high-grade hematite ore with more than 60 per cent iron content.