Chinese Taking Increasing Interest In Australian Miners

Australian miners are seeing an unprecedented level of interest from Chinese entities seeking to invest in their operations. So says Andrew Forrest, CEO of Australian iron ore miner, Fortescue

Mr Forrest said that "The increase from China, from Asia, to get involved in Australian sourced businesses is unparallelled right now. I think what has occurred in China is an understanding that assets that really weren't for sale at any price just might now be for sale."

Earlier this week Rio Tinto said it was in talks with the Aluminum Corporation of China - Chinalco - about possibly selling the Chinese group minority stakes in some of its assets and issuing it with a convertible equity.

Mr Forrest said the talks between Rio and Chinalco had been going on for some time and that other Australian miners had also been in discussions with interested Chinese parties.

He noted that "Rio talking the option through with China has been around for months and I feel that Rio are not alone in that, all of us have received very strong interest."

Fortescue did not need to do a deal with a Chinese group to fund its expansion program but would not rule out doing a deal if it made sense.

Mr Forrest added that "We are well capitalised but if an opportunity came across our table that really locks in long-term customer supply, that really locks us further and deeper into China, then we will look at it seriously."

Mr Forrest further said he believes commodity markets will bottom in 2009 and that the drivers of the mining boom will remain intact. He is confident the stimulus packages being put in place by the Chinese government will quickly boost the Asian giant's economy and turn around demand for commodities.

Fortescue expects Chinese steel consumption to be 500 million tonnes in 2009 and for this figure to rise to 750 million tonnes by 2025, underpinning demand for iron ore.

Miners are also benefiting from falling capital costs as the heat comes out of the industry, the cost of Fortescue's yet to be approved expansion of production to 120 million tonnes a year is likely to fall by between 10% and 20%.

Source: Dow Jones