The Federal Government has approved the new deal by Minmetals from China to buy most of the mines owned by struggling OZ Minerals for around $A1.6 billion ($US1.2 billion).
Federal Treasurer, Wayne Swan said in a statement issued last night that he had approved a revised application by China Minmetals Non-ferrous Metals Co Ltd to acquire certain mining assets of OZ Minerals Ltd, "but not including the Prominent Hill mine, conditional on legally enforceable undertakings."
Mr Swan said Minmetals will, in summary:
- Operate the acquired mines as a separate business with commercial objectives.
- Operate the mines using companies incorporated, headquartered and managed in Australia under a predominantly Australian management team.
- Price all off take on arms length terms by a sales team headquartered in Australia, with reference to international observable benchmarks and in line with market practice.
- Maintain or increase production and employment at Century, Rosebery and Golden Grove mines, pursue growth in Century and Rosebery mines, reopen Avebury mine and develop Dugald River, subject to economic conditions.
- Comply with Australian industrial relations laws and honour employee entitlements.
- Maintain and increase levels of Indigenous employment in its local operations and honour agreements with Indigenous Australian communities.
"These undertakings, which are designed to protect around 2,000 Australian jobs, ensure consistency with Australia’s national interest principles and are a condition of my approval under the Foreign Acquisitions and Takeovers Act 1975 (see Attachment).
"Minmetals’ revised proposal is for Golden Grove, Century, Rosebery, Avebury and Dugald River mining operations in Australia.
"These produce zinc, copper, lead, and silver, which are priced with reference to the London Metal Exchange. Currently, some 80 per cent of total production from these mines is subject to life of mine contracts.
"On 27 March, I announced that an earlier takeover proposal by Minmetals for OZ Minerals that included Prominent Hill, which is located within the Woomera Prohibited Area, could not be approved on national security grounds.
"OZ Minerals has advised that it intends to remain an ASX listed company and to continue operating and further developing the Prominent Hill mine."
OZ Minerals said earlier this month the new Minmetals deal would allow it to retire all its debts, barring its convertible bonds, and still have a cash balance of about $A600 million on completion of the transaction.
OZ Minerals would retain Prominent Hill, the Martabe gold and silver project in Indonesia, exploration assets in Cambodia and Thailand as well as its investments in listed entities.
"This structure also allows OZ Minerals shareholders to retain full ownership of Prominent Hill which has now commenced production and is expected to become cash-flow positive during the second half of 2009," OZ Minerals Chief Executive Andrew Michelmore said in a statement.
OZ shares closed up 1 cents yesterday at 63 cents.
Santos yesterday reported a drop in March quarter oil and gas output and sales revenue but maintained its full year guidance.
And that was enough to give investors confidence and they pushed the shares up 3.9% to $16.50 at the close.
Production of 13.2 million barrels of oil equivalent (boe) for the three months to March 31 was 4% lower on the same period in 2008, largely due to the sale of a 40% of the Gladstone liquefied natural gas (LNG) project to Malaysia’s Petronas in August.
The company said natural field decline in Australia and Indonesia also contributed to lower output.
Sales revenue fell 15% to $540 million in the March, 2009 quarter.
That was primarily due to lower oil prices, which was partially offset by higher gas sales revenue.
The average portfolio gas price of $A4.50 per gigajoule was up 13% on the March quarter of 2008, mainly due to stronger LNG prices.
But the average realised oil price of $A71.16 per barrel was down 33% on the previous corresponding period due to lower international oil prices offset by a weaker Australian/US dollar exchange rate.
That’s the global slowdown (and the credit crunch) having an impact.
All full year guidance has been maintained. Production is expected to be between 53 and 56 million barrels of oil equivalent.
"Oil production was 2% higher than the corresponding period, mainly due to better performance from assets in Western Australia partially offset by lower Indonesian oil production due to natural field decline at Oyong.
"Indonesian gas production was 30% higher than the March 2008 quarter as Maleo production is no longer constrained by pipeline capacity restrictions," Santos said.
And it was a similar story with gold miner, Newcrest Mining which also maintained its full-year production guidance, after reporting a fall in gold production in the March quarter.
Newcrest said gold production was down more than 17% in the March 2009 quarter compared to the corresponding period last year, but copper production rose.
Newcrest’s March quarter production report showed gold production was down from 364,794 ounces in the March 2009 quarter to 441,341 ounces at the corresponding quarter last year, a fall of 17%.
It was down 5% on the December quarter.
The shares rose 49 cents to $28.89 because the market could see a couple of other figures that were favourable, along with the maintained guidance.
Copper production was however up 11% compared to the corresponding period last year, to 23,436 tonnes and up 10% on the December 2008
