Chinese investments in Australian resources

July 19, 2010

This list tracks Chinese Government investments in Australian resource projects.

Anshan Iron & Steel: paid $39 million in September 2007 for 13% of iron ore miner Gindalbie and signed a $1.8 billion joint venture deal to develop the Karara deposit. Wayne Swan has approved Anshan moving to 38% after a $162 million placement.

Baosteel: the Chinese steel giant reached a co-operation agreement in August 2009 with WA-based explorer Aquila Resources. Baosteel invests $286 million for nearly 44 million shares. The agreement will assist development of its iron ore, coal and manganese projects.

Baotou Iron & Steel: agreed to invest up to $40 million for a 10% equity stake in Centrex Metals and 50% of its prospective Bungalow iron ore project in South Australia.

Cape Lambert Resources: has entered into a conditional sale agreement with Hong Kong investment company China Sci-Tech Holdings Ltd (CST) to offload its Lady Annie copper project for $135 million.

Centrex: Wuhan Iron and Steel would invest $180 million for a 50% share in five of its iron ore tenements on the Eyre Peninsula. WISCO will also take a 15% stake in the company for $9.7 milion. It is Centrex's second major Chinese partner - the company is 10.12% owned by Chinese state-owned steel maker, Baotou Iron & Steel Group.

Chalco: in September 2007 Queensland government awards rights to develop $3 billion bauxite project near Aurukun, but Noel Pearson is loudly complaining about the dealings with the local indigenous community.

CGNPC Uranium Resources: the Chinese state-owned energy group (URC) plans to acquire the Perth-based uranium explorer, Energy Metals. The takeover offer is through a subsidiary, China Uranium Development (CUD) and is worth about $120 million or $1.02 a share.

Chinalco spent $15.5 billion for 9% of Rio Tinto shares in London on February 3, 2008 but was rebuffed in its attempts to pump in another $US20 billion to move to 18% and grab key stakes in numerous mines.

China Iron & Steel: the Rio Tinto-operated Channar iron-ore mine in the Pilbara has a capacity of 10mtpa and is 40% owned by China Iron and Steel, an investment worth well over $2 billion. Has also bought 19.9% stake in Apollo Minerals.

China Metallurgical Group: received FIRB approval to buy the Cape Lambert Iron ore project in WA for $400 million, but then controversially on-sold control to a Russian company.

China Nonferrous Metal Mining Co (CNMC): secured a 51.66% shareholding for $252 million of Sydney-based rare earths company Lynas. CNMC also provided a corporate guarantee to a Chinese Bank to raise another $253 million, which brings the cost of transaction to $505 million. They have since been denied the percentage of ownership by a decision by the regulator FIRB which requested to be cut to less than 50 per cent.

CNOOC: holds a 25% share in China LNG, a new joint venture within the existing $19 billion North West Shelf structure that diluted the other six joint venture parties down to 12.5% each.

China Petrochemical Corporation: China's biggest energy distributor secured 60% control of the Puffin oil field in the Timor Sea last year from the struggling AED Oil in a deal that values the assets at $1 billion.

China Railway Materials: a Chinese state-owned enterprise, with the group agreeing to take a 12 per cent stake worth $12.6 million, in the junior iron ore explorer, FerrAus, a wannabe iron ore miner in the Pilbara.

China West Mining: Chinese company which also bought 10% or 15 million shares in FerrAus, a wannabe iron ore miner in the Pilbara.

China Sci-Tech Holdings: the Hong Kong investment company entered into a conditional sale agreement in March 2010, to purchase Cape Lambert Resources' Lady Annie copper project for $135 million.

CITIC: paid more than $400 for its 22.5% stake in the Portland Aluminium Smelter in the 1990s and spent $113 million in July 2007 lifting its stake in Macarthur Coal stake from 11.6% to 19.9%, which is now heavily under-water.

Guangdong Foreign Trade Group: agreed to invest more than $60 million for up to 20% of zinc and nickel miner Kagara in June 2009.

Guangdong Risking Assets Management: agreed to invest $182 million for 20% of Pan Australian Resources at the knock down price of 39.5c a share in May 2009.

Henan Yuguang: purchased 20.7 million shares in Kimberley Metals in mid 2010 which required shareholder approval.

Hunan Valin Iron and Steel group: one of China's leading steel mills invested $644.8 million in early 2009 at $2.48-a-share to become the second largest shareholder in Fortescue Metals Group with about 17%. Valin has also agreed to buy iron ore and participate in any future new projects Fortescue undertakes.

Jiangsu Shagang: the Chinese steel mill owns 10% of BHP's Wheelarra iron ore mine near Newman in the Pilbara which produces 12 million tonne per annum.

Jilin Tonghua Iron & Steel: bought 10% of IMX Resources which is attempting to develop the Cairn Hill copper-gold project near Coober Pedy in South Australia, along with other Australian and African projects.

Maanshan Iron & Steel: Chinese steel mill owns 10% of BHP's Wheelarra iron ore mine near Newman in the Pilbara which produces 12 million tonne per annum.

Minmetals: the Chinese government's base metals trader offered $US1.206 billion to buy the majority of OZ Minerals' operations including Sepon, Avebury, Rosebury, Golden Grove, Century and Dugald River.

PetroChina: in partnership with Shell, they increased their original offer of $4.45 a share to $4.70 a share in March 2010, or $3.5 billion, of Queensland-based Arrow Energy.

Shanghai Baosteel Group: owns 46% of the Rio Tinto-operated Eastern Range iron ore mine in Pilbara which produces 6.5 million tonnes a year worth more than $500 million a year.

Shenhua Group Corp: China's biggest coal company was lining up for NSW power privatisation and then paid $300 million to the Iemma government in early 2008 for the right to explore for coal on 190 square kilometres near Gunnedah.

Shougang Corp: spent $400 million buying 20% of WA iron ore company Mt Gibson Iron in early 2008 and spent $56 million in March 2007 buying 13% or iron ore developer Australian Resources, also agreeing to fund a $US2.1 billion development of the Balmoral South project and associated port project in WA. Also bought 20% of Prosperity Resources.

Sinosteel: spent $100 million for 10% of WA iron ore hopeful Midwest Corp in early 2008 and then completed a $1.37 billion agreed takeover at $6.37 a share in 2008. Has also bought a minority stake in Murchison Metals, but only has FIRB approval to go to 49%.

Yilgarn Consortium: a group of five Chinese companies which have been given FIRB approval to build the $4 billion Oakajee port and rail project in Geraldton and also received $339 million of funding in the 2009 Federal budget.

Tangshan Iron & Steel: Chinese still mill which owns 10% of BHP's Wheelarra iron ore mine near Newman in the Pilbara which produces 12 million tonne per annum.

Wuhan Iron & Steel: Chinese still mill which owns 10% of BHP's Wheelarra iron ore mine near Newman in the Pilbara which produces 12 million tonne per annum.

Xinwen Mining: announced it had agreed to pay a staggering $1.5 billion for Linc Energy's Bowen Basin coal tenements in Queensland but this turned into one of those "Chinese deals" which wasn't as binding as you'd think.

Zhongjin Lingnan: China's third largest zinc producer acquired a majority stake in the Broken Hill zinc and lead miner Perilya in February 2009. Perilya shareholders agreed to hand over control of 50.1 per cent of the miner to Zhongjin in return for a $45.5 million share placement.

Check out all the Mayne Report business lists here. Please email through corrections or additions to stephen@maynereport.com.