Australian mining group Murchison Metals found their shares lift 16.6 percent last week when China’s Sinosteel bought a 49.9 percent stake in their iron-ore business. Sinosteel requested this controlling stake one week before Wayne Swan, the Australian federal treasurer, approved the application. Originally, Sinosteel requested 100 percent ownership, but the group withdrew that request for the smaller application.
In addition to their latest shares with Murchison Metals, Sinosteel has 100 percent ownership of another Australian corporation in the midwest region. Sinosteel found a hostile bid turn in their favor earlier this year, when they won Midwest Corp. The latest move with Murchison Metals could create a precedent for a proposed Australian ruling that would set a 49.9 percent cap for all Chinese investments in resource projects. One newspaper shares, however, “Ian McCubbin, an expert on Sino-Australian relations with law firm Deacons, said Sinosteel’s not getting permission for more than 50 percent was not an indication China would be blocked from future controlling stakes.”
Although the 49.9 percent limit has not been approved, the Australian government has expressed plans to keep control over foreign ownership. Rob Jeffries, the CEO of Geraldton Iron Ore Alliance, says that Sinosteel’s acquiring of Midwest Corp. means that “it is reasonable to expect that they [the government] put some control over the share that Sino could have over Murchison Metals.”