China takeover saved Australian firm

Debt-laden Australian miner OZ Minerals said Sunday it would go into receivership if a 2.6 billion Australian dollar (1.7 billion US) takeover offer from China's Minmetals does not proceed.

While some Australian politicans have expressed unease at Chinese investment in the country's resources sector, OZ Minerals chief executive Andrew Michelmore said last week's offer had saved his company.

"Having stared down the barrel of receivership or voluntary administration at least three times in the last few months, this is the best outcome for our shareholders," Michelmore told ABC television.

The proposed deal came days after China's state-owned aluminium firm Chinalco said it was putting 19.5 billion US dollars into another troubled Australian mining giant, Rio Tinto.

Senators from across the political spectrum have raised concerns about Beijing's state-owned entities buying into Australia's resource sector.

However, Michelmore said he was comfortable with Chinese money moving into the sector and believed Minmetals would follow corporate guidelines.

"All the information I have is that they want this as their offshore vehicle to grow their base metals business," he said.

"They have a number of entities that they have to report back to and they are very committed to corporate governance," he said. "I think they are going to see this as a platform to really grow their business."

Before the Minmetals offer, OZ Minerals flagged asset write-downs of up to 2.8 billion Australian dollars due to steep commodity price falls sparked by the global financial crisis.

OZ Minerals had been forced to sell assets and implement other cost-saving measures, including job and production cuts and mine closures as it struggled with a debt burden of 1.1 billion Australian dollars.

Both the OZ Metals and Rio Tinto deals need approval from their shareholders and the Australian government before they can proceed.

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