The Macarthur Coal situation continues to get a more absurd with China’s Citic Resources Holdings lifting its stake above 20% to become the coal producer’s biggest shareholder.
Citic now has a 20.39% stake in MCC, up from 17.66%. It’s a Government controlled resources investor and trader, so the move has official approval in Beijing.
Citic has received approval from the Australian Securities and Investments Commission and the Foreign Investment Review Board, it said for the increase.
Citic has moved past ArcelorMittal, the world’s biggest steelmaker, as the biggest shareholder in Macarthur.
ArcelorMittal last month ended takeover talks with Macarthur, and then boosted its holding to 19.9% from 14.9%.
Posco, the world’s 4th biggest steelmaker owns 10% of MCC, having bought the stake for $20 a share from the company’s founder, Ken Talbot.
Macarthur is the world’s biggest producer of pulverised coking coal used in steel mills’ blast furnaces. ArcelorMittal is the company’s biggest customer.
Macarthur fell as much as 53c, or 3%, to $17.31. They closed at $17.46, up 38c.
Under Australian takeover rules, any entity owning more than a 20% stake is required to make a full takeover bid, though Citic can boost its stake by 3% every 6 months under so-called legislative ‘creep’ provisions.
It would appear that Citic moved to 19.9% of MCC from 17.66% and then ‘crept’ past that stake and AcrelorMittal in a separate series of transactions to boost its holding to 20.39%.
And shares in Energy Resources of Australia (ERA), kicked up 19c yesterday to $24.15 despite what seemed to be disappointing news in the second quarter production report.
It was a solid market report on a miserable day of trading on the ASX when most investors soured and sold. But they wanted ERA.
ERA reported a 31% drop in output for the quarter after restricted access to the open pit.
ERA said it produced 1,030 tonnes of uranium oxide in the second quarter of calendar 2008, compared to 1,490 tonnes in the previous corresponding quarter.
The uranium miner said the drop in output was due to restricted access to the higher grade ore in the bottom of the pit at the Ranger mine in the Northern Territory, following heavy rainfall in the region.
"Uranium oxide production of 1,030 tonnes was 22 per cent lower than the first quarter of 2008, and 31 per cent lower than the corresponding quarter in 2007," the company said in the report to the ASX.
"This was due to restricted access to higher grade ore as foreshadowed in the March 2008 Quarter Operations Review. At the end of the wet season, although water levels in the pit were substantially lower than at the same time in 2007, there was still restricted access to higher grade ore, which is located predominantly in the bottom of the pit.
"In line with the guidance provided in the March 2008 Quarter Operations Review, ore grade processed in the second quarter averaged 0.22 per cent uranium oxide, as the mill processed stockpiled lower grade ore for the majority of the June quarter.
"Access to higher grade ore allowed mill head grade to return to 0.31 per cent uranium oxide in the last two weeks of June 2008, as compared to last year when the significant weather event restricted access to higher grade ore until late in the fourth quarter of 2007.
"Ore milled for the quarter was two per cent higher than the corresponding quarter in 2007, and 18 per cent higher than the previous quarter due to improved plant utilisation and milling rates.
"Ore mined was two per cent higher than the corresponding quarter in 2007 and 13 per cent lower than the first quarter of 2008 as water in the pit restricted access to ore. Use of mining equipment focused on waste movement to support the mine extension announced in 2007."
Output during the six months to June 30 was 6% lower than the previous corresponding period at 2,357 tonnes of uranium oxide.
ERA is 68.4% owned by Rio Tinto which is due to release its second quarter and half year production report later today.
