A Chinese steel company agreed to buy a stake in Australia's IMX Resources and to acquire the output of one of its mines, the latest move by China to secure mineral resources amid consolidation in the global mining industry.
IMX Resources, one of Australia's smaller mining companies, will sell a 9.99% stake priced at A$13.93 million (US$12.2 million) to Jilin Tonghua Iron & Steel (Group) Mining Co., IMX Resources said in a statement to the Australian Stock Exchange. The funds will be used for the development of IMX Resources' Cairn Hill mine in South Australia.
Chinese companies have made a series of overseas mining acquisitions in the past year, seeking to secure raw materials to make steel and other basic materials.
The push has taken on added urgency since November, when BHP Billiton Ltd. proposed acquiring Rio Tinto PLC for more than $130 billion in a deal that would unite the world's No. 1 and No. 3 miners. Rio has rejected the proposal, but the prospect of a tie-up has worried Chinese government and corporate officials, who fear it could give suppliers too much pricing power.
A few weeks ago, a Chinese company proposed paying A$1.2 billion for Midwest Corp., an iron-ore developer in Perth, Australia, while a separate Chinese consortium bid C$455 million (US$464 million) for Vancouver, British Columbia's Northern Peru Copper Corp.
Under the latest agreement, Jilin Tonghua will pay 85 Australian cents a share for 16.39 million ordinary shares in IMX Resources, the Australian company said. Jilin Tonghua will also purchase 100% of the Cairn Hill mine's output for at least three years, output that is expected to amount to about 1.2 million to 1.4 million metric tons a year.
Officials at Jilin Tonghua couldn't be reached for comment. The IMX Resources statement quoted the vice chairman, as saying the deal is Jilin Tonghua's first offshore investment.