01/04/2009 - 06:37

Forrest 'expected' Hunan Valin deal nod

01/04/2009 - 06:37

Bookmark

Upgrade your subscription to use this feature.

Fortescue Metals Group chief executive Andrew Forrest says he always expected the federal government would allow a Chinese state-owned steelmaker to increase its stake in the iron ore miner, but expects no further equity investment.

Fortescue Metals Group chief executive Andrew Forrest says he always expected the federal government would allow a Chinese state-owned steelmaker to increase its stake in the iron ore miner, but expects no further equity investment.

Federal Treasurer Wayne Swan gave the green light yesterday for Hunan Valin Iron and Steel Group to lift its stake in FMG to 17.55 per cent from 10 cent through a $645 million equity investment deal.

The transaction was announced in late February.

Mr Forrest said he never doubted that Mr Swan would back the deal and that the miner would continue to talk with a number of companies around the world.

He said FMG will maintain its independence but the Chinese investment was needed because capital is in short supply.

"I feel that we have been able to raise much-needed capital ... in a way that is totally friendly to Australia," Mr Forrest told ABC Radio.

The resources boss said Australia's sovereignty would be safe as local shareholders kept a majority stake in Fortescue.

"For five years, almost six years now, I have had a dream," he said.

"I have had a vision of getting Chinese investment into Fortescue in a way that completely respects Australia's sovereignty and most importantly also Australia's Fortescue shareholders."

Hunan Valin Iron and Steel Group would have "absolutely" no control over Fortescue.

They can only put one person on our board and that has to be their chairman.

Mr Swan blocked China's Minmetals' $2.6 billion bid for OZ Minerals last week because a South Australia copper and gold mine in the deal was near the Woomera weapons testing range.

Mr Forrest said the government was right to block the takeover bid on national security grounds.

"There is a legitimate concern about military, technical intelligence and ... it is an extremely sensitive subject in China and it's an extremely sensitive subject in Australia," he said.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options