National security breached in China’s Oz takeover: Swan27th...

National security breached in China’s Oz takeover: Swan

27th March 2009, 15:00 WST

The Federal Government has used “national security” as its reason for opposing plans by Chinese-state backed Minmetals to takeover debt-laden base metals miner Oz Minerals.

Treasurer Wayne Swan said today the proximity of the company’s Prominent Hill copper and gold mine in South Australia to the government’s Woomera Prohibited Area weapons testing range meant the takeover would breach national security.

But the government has left the door open for negotiation saying it would reconsider the proposal if Prominent Hill was not part of the deal.

Mr Swan said the Woomera Prohibited Area weapons testing range made a unique and sensitive contribution to Australia’s national defence.

He said the Minmetals bid could not be approved if it included Prominent Hill.

Discussions between the Foreign Investment Review Board and Minmetals were continuing in relation to Oz Minerals’ other businesses and assets.

The government said it was willing to consider alternative proposals relating to those other assets and businesses.

A spokesman for Minmetals confirmed the company remained in discussions with FIRB.

“Our focus is on delivering an agreed solution to OZ minerals that meets national interests, can satisfy lenders, deliver stability to employees and protect existing operations,” he said.

OZ Minerals was in a trading halt today having last traded at 55.5 cents.

The company is seeking an extension to refinance $1.3 billion of debt it owes, which is due on Tuesday.

The FIRB complicated the company's position further on Monday by extending its review of the Minmetals takeover offer by 90 days after an initial 30-day period expired on Saturday, March 21.

MELBOURNE
BLOOMBERG