Failed Oz Minerals bid

The latest setback to a Chinese State-owned firm in its bid for an Australian mining company shows the gloomy prospect Chinese corporations face in overseas acquisitions.

Two weeks ago Australian authorities announced they will postpone the examination and approval of China Minmetals's takeover bid for Oz Minerals, the country's third-largest mining company, citing national security concerns. Whether or not the deal will get approved is due to be decided in 90 days. It was the fourth time in a month that a Chinese corporation's acquisition application was postponed by Australian authorities.

Chinalco, Valin and Ansteel earlier failed to press ahead smoothly in their respective bids for Australian miner Rio Tinto, Fortescue Metals Group and Gindalbie Metals, so the latest decision by the Australian government did not surprise many.

There is clear opposition in Australia to Chinese companies moving toward acquiring its debt-ridden mining corporations.

Earlier last month, Xiong Weiping, general manager of Chinalco, visited Australia and talked to government officials. Xiong dispelled distrust about his company's investment in Rio Tinto, but there is still long to go toward mutual understanding.

According to Peter Arden, an analyst at Ord Minnett Ltd, an affiliate of JPMorgan Chase & Co, the recent acquisition moves by Chinese companies have not been viewed as purely economic.

His remarks sound reasonable, given that Chinalco, Minmentals and Valin are not the first Chinese companies that have encountered a setback in their overseas acquisitions.

China remains the largest buyer of Australia's mining production, so the economic interests of both are closely linked. Many Australians acknowledge their country's economic growth over the past decade has been fuelled to a large extent by ever-increasing economic exchanges with the booming Asian nation.

Mutually beneficial economic deals between Australia and China should not be turned into political issues.

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(China Daily 04/06/2009 page2)