The Australian, Canberra
Changes likely to laws for investors
Catherine Armitage, China correspondent
20 April 2005
AUSTRALIA will consider changes to foreign investment guidelines to give China preferential treatment in buying into Australian resource projects under a free trade deal, John Howard confirmed yesterday.
The Prime Minister said Australia was "highly desirous" of greater Chinese investment in Australian resources, and told Chinese Premier Wen Jiabao and President Hu Jintao this in talks on Monday.
Since 2003 the Chinese leaders have been pushing Chinese companies to buy up overseas resource projects to help guarantee supplies of sought-after commodities.
Resource-rich Australia, a trusted, long-term, First World trading partner, is a favoured target, as China’s biggest minerals trading company, the state-owned Minmetals Corporation, enthusiastically confirmed yesterday.
Vice-president Frank Xu said publicly for the first time that the company had been looking closely at buying into several Australian resource projects. Though he declined to put a figure on how much the company was ready to spend, Mr Xu said the company was "excited" at the prospect of being able to invest more readily under an FTA.
"Certainly we feel excited because Chinese companies can penetrate to mining and resource projects more openly," he said. The company saw "great chances" for investing in commodities that it could ship back to China.
The targets were "retrievable resources" with the largest rate of return, Mr Xu said, naming iron ore, copper, bauxite, nickel, lead and zinc.
Minmetals was "catching up with the developments of some projects" and "evaluating opportunities", he said.
The company recently was tipped as a buyer for WMC Resources, now subject to a $9.2 billion takeover by BHP Billiton. Mr Xu said Minmetals was closely following developments and indicated it would be a buyer in any break-up of the company’s assets.
It is thought to be particularly interested in the Olympic Dam uranium mine.
"We are interested in parts of the products which WMC is producing," Mr Xu said.
With more than 30 nuclear power plants under construction or planned in China by 2020, bilateral talks are under way on changes to a nuclear safeguard agreement, with a view to opening Australian uranium sales to China.
Iron ore was also "key for Chinese industry", Mr Xu said, but he denied that Minmetals was looking at investing in Andrew Forrest’s Fortescue Metals Group development in the Pilbara, or Gina Fortescue’s Hope Downs project. Both projects are courting Chinese investors.
In September, Minmetals launched a failed takeover bid for Canada’s biggest mining company, Noranda, worth several billion dollars. The talks ultimately failed, partly because the surge in copper and nickel prices made the company look too expensive.