Is FIRB under the pump or just stalling? Blair PriceThursday, 8...

Is FIRB under the pump or just stalling?

Blair Price
Thursday, 8 October 2009

THE Foreign Investment Review Board would appear to be under-resourced with China’s recent plays for Australian mining companies piling up, while there are other concerns the board is using delaying tactics.

According to various reports, China’s Baosteel has resubmitted its application to the FIRB this week for its $A285.6 million deal to gain a 15% stake of coal and iron ore explorer Aquila Resources.

Sources have indicated to the Australian Financial Review that FIRB will not make a decision on Baosteel’s offer in the initial 30-day period because of its workload.

Dow Jones Newswires reported that FIRB had asked “a number of Chinese investors to resubmit applications” and questioned whether it was a stalling tactic or if the government body was genuinely snowed under.

The biggest application on its hands is the $3.5 billion takeover of Felix Resources by Yanzhou Coal.

On September 11, Yanzhou had to resubmit its FIRB application, and there are expectations the Chinese and Australian coal producer will have to resubmit the application yet again.

China Nonferrous Metal Mining recently abandoned its $500 million bid for a 51.6% stake of rare earths producer Lynas Corporation after being forced to resubmit its FIRB application three times, an event which triggered calls of racism from Queensland billionaire Clive Palmer.

Late last month FIRB executive director Patrick Colmer stated the federal government preferred foreign investments in undeveloped projects to remain under 50% and at less than 15% in major producers.

But Patersons Securities coal analyst Andrew Harrington was of the view the Felix takeover was likely to get FIRB approval, although he acknowledged the investment guidelines added a bit of uncertainty.

Outside of its company-making Moolarben project, Felix is expecting annual sales of 7.5 million tonnes of coal from its portfolio of mines.

Moolarben is set to start open cut mining this month and is expected to produce 6Mt of thermal coal for 2010, with 4.5Mt destined for export and 1.5Mt for the domestic market.

Full ramp-up will have Moolarben exporting up to 13Mt of product coal for export and domestic markets, with 8.8Mt per annum from open cut mining and 4-4.2Mtpa from longwall mining.