China’s Minmetals buys OZ Minerals

Today’s Age reports that

China Minmetals Corp., China’s largest metals trading company, agreed to pay 2.6 billion Australian dollars ($1.7 billion) in cash for Melbourne-based copper producer OZ Minerals.

Most of OZ Minerals’ mines are in Australia, and the purchase comes in the wake of Chinalco’s purchase of shares in Rio Tinto. But what makes this interesting for us is that OZ Minerals also owns the Sepon mine, the only functioning copper mine in Laos, which ships mostly (or only?) to the Chinese market, but whose main customer has allegedly been executed for corruption. Recently the mine laid off 311 workers.

The mine´s former management has undertaken some “corporate social responsibility” projects, i.e., it has spent some money in nearby “communities” and financed the building of a stadium in nearby Savannakhet, so it has had a reasonably good relationship with the NGOs. It will be interesting to see if and how all that will change with the transfer of ownership.

See also the Sydney Morning Herald´s report here.

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2 Responses to China’s Minmetals buys OZ Minerals

  1. Melbourne’s The Age reported today (24 March) that Australia’s Foreign Investment Review Board decided to subject the OZ Minerals proposal
    to another 90 days of scrutiny (“China delay corners OZ; debt looms”). The FIRB has also extended scrutiny of the Rio Tinto/Chinalco deal by 90 days. The article reports that National Party senator “Barnaby Joyce recently took to the airwaves in television commercials in Canberra and Queensland to warn againststate-owned foreigners buying ‘the source of our wealth’.”

  2. Ultimately, the Australian government rejected the takeover on national security grounds: one of the mines, in Woomera, was deemed to be too close to a NATO intelligence facility. The two companies then agreed to a revised deal, under which Minmetals will buy most of Oz Minerals’ mines, including the Sepon mine, but not the company itself (“Minmetals to buy OZ assets for $1.2 billion,” Domain-B.com, 2 April 2009, as reported on LaoFAB).

    The newly appointed senior manager of the Sepon mine, Richard Taylor, affirmed that despite the takeover, the mine’s social responsibility projectsw will continue. These projects are not very clear: Vientiane Times described them as “financial assitance worth US$ 500,000 to a trust fund” plus scholarships for Lao students to go to Australia. It is unclear what trust fund and over what period this contribution takes place. Taylor also said, contradicting himself, that the scholarships have been suspended because of the economic crisis (Vientiane Times, “Sepon’s commitment to remain unchanged,” 3 April 2009, as reported by LaoFAB).

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