Wuhan Iron and Steel's overseas takeover talk paused by seller
Updated: 2011-01-25 13:54
By Gao Yuan (chinadaily.com.cn)
The Australian mining company Riversdale Mining Ltd (RML) suspended talks of a takeover by Wuhan Iron and Steel Co (WISCO) over a Mozambican coalmine project, while another bidder, Rio Tinto Group, is likely to win the deal, National Business Daily reported Tuesday.
The story has been confirmed by WISCO, China's third largest steelmaker by capacity, the newspaper said.
Last year, WISCO agreed to buy RML's stocks at a price of $10 a share. However, another buyer, Rio Tinto Group, pushed the price to $16 a share in December, the report said.
According to a preliminary agreement signed between WISCO and RML in June of last year, the Chinese steelmaker would subscribe to eight percent of RML's share with $800 million. The purchase was supposed to give WISCO 40 percent ownership of RML's Zambeze coalmine project in Mozambique, the newspaper said.
According to the report, Zambeze has a reserve of 9 billion tons, and the coking coal it produces is mainly used in steel making.
"Half of the international coking coal market has been taken by the top-five providers, and if Rio Tinto could finally sign deals with RML, the monopolization would surly become more serious," said Qin Fenfen, an analyst from the steelcn.com.
However, some researchers said even though the takeover talk failed, it does not mean that Chinese companies would lose the pricing right over coking coal. In China, only about 10 percent of the coking coal currently depends on import, the report said.
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