China’s lust for iron ore hits the rocks in the outback

Jul 01, 2008 | 12:05 PM |

SINGAPORE Sinosteel Corp., one of China's largest natural resource companies, might be thinking twice about getting embroiled in one of Australia's longest-running soap operas.

The Beijing-based company looked like a safe bet to complete what would have been China's biggest overseas mining investment to date by snatching up iron ore junior Midwest Corp. Ltd., West Perth, Western Australia.

For years, Midwest and counterpart Murchison Metals Ltd., also based in West Perth, have been flirting with a possible merger/takeover deal. But Murchison dropped its takeover proposal earlier this year, saying there was no chance of a good deal for shareholders.

The strategy looked safe rival Australian suitor Murchison Metals had backed off and Sinosteel managed to persuade the Midwest board to agree to a bid after some initial resistance. End of story, right?

Not quite. Having previously concluded that a good deal was impossible, Murchison returned to the fray and put together a reverse takeover deal that would cut out the Chinese. Sinosteel said it wouldn't raise its cash offer, but Midwest hasn't quite made up its mind. ....

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