CHARTS: The coming critical minerals trade war is BRICS short of a load
"While a large number of countries around the world continue to talk about securing raw material supply, China is actually doing something about it."
China’s Baosteel Group Corp. and its partner Aurizon Holdings (ASX: AZJ) launched a bid Monday to acquire Australian iron ore and coal miner Aquila Resources (TSE, ASX: AQA) in a A$1.4 billion ($1.3 billion) deal.
China’s largest steelmaker Baosteel and Australia’s biggest freight company Aurizon is offering to pay A$3.40 a share in cash, a 39% premium to Aquila’s closing price on Friday.
Aquila shares rocketed 39% to a high of A$3.41 and closed at A$3.34 Monday.
Baosteel currently owns 20% of Aquila. According to Baosteel, the company invested in Aquila in 2009 to help fund its iron ore project and a separate coking coal mine. Aquila is involved in several projects in Australia and South Africa.
If successful, Baosteel will own as much as 85% of the company with Aurizon holding the balance.
This offer may signal a resumption of Chinese companies buying up global resources in the midst of a price slump, according to Bloomberg. The iron ore price is down almost 20% this year, while coking coal is trading at prices last seen during the financial crisis.
The company has appointed Goldman Sachs as financial advisor for the deal.
