Thursday February 5, 1:09 PM China Metal Co Confirms Plan To Buy PNG Ramu Nickel Proj Sydney, Feb. 5 (Dow Jones) - A Chinese government-controlled construction company has confirmed it plans to acquire a majority stake in the long-delayed Ramu nickel project in Papua New Guinea.
An official with the China Metallurgical Construction Corp. in Beijing told Dow Jones Newswires Thursday that talks are ongoing with the mine's current owners.
ADVERTISEMENT
Papua New Guinea-based and Australian-listed Highlands Pacific Ltd. controls the project with a 68.5% stake, while the Papua New Guinea-government- controlled Mineral Resources Development Co. owns the remaining 31.5%.
The official, who is familiar with the negotiations, said an initial estimate has put the price tag for a stake of about 70% in Ramu at US$650 million.
While he cautioned that the final amount of the purchase has yet to be finalized, it is understood that an agreement to acquire control of the nickel mine has indeed been struck.
The official said confirmation of the amount should come within a month.
Attempts to reach Highlands Pacific Thursday were unsuccessful. Tuesday, the company filed a statement with the Australian Stock Exchange saying: "At this stage, no commercial agreement has been finalized with any party; however, active discussions are ongoing."
The statement acknowledged that the company "is having discussions with several parties regarding the restructure of Ramu, including Chinese parties."
Highlands Pacific initially indicated in its December activities report that it was prepared to see its stake reduced to 15%-20% with the advent of a new joint-venture partner.
Press reports earlier this week in Australia and Papua New Guinea first named CMCC as Ramu's buyer and said the prime minister of Papua New Guinea would be in Beijing Feb. 10 for a signing ceremony.
The reports also said CMCC would finance 100% of the construction costs for the Madang province project and buy all the nickel and cobalt it produces, thus securing an important source of steel inputs for China.
According to analysts, Chinese demand for stainless steel is expected to grow by close to 25% in 2004, and nickel is a key component in stainless steel. This would mark the third straight year of double-digit growth in China, which is projected to account for 24% of world demand this year, according to Macquarie Bank.
HIG Price at posting:
0.0¢ Sentiment: None Disclosure: Held
