CHINESE companies are racing to provide local mining and energy developers with funding offers amid signs that conventional project funding is becoming more accessible as global economic conditions stabilise.
CHINESE companies are racing to provide local mining and energy developers with funding offers amid signs that conventional project funding is becoming more accessible as global economic conditions stabilise.
Aspiring iron ore and molybdenum producer Moly Mines was the latest beneficiary of China's race to lock in future supplies of key commodities, after securing a conditional $US700 million funding offer from China's Hanlong Mining Investment.
Hanlong's offer comes just 12 months after Moly was virtually forced to stop work at its proposed Spinifex Ridge molybdenum mine near Marble Bar due to funding constraints.
It also coincided with China Railway Engineering Corporation's move to 49 per cent of aspiring junior coal miner RMA Energy under a proportional takeover bid targeting up to 80 per cent.
Hanlong will take a controlling 54 per cent stake in Moly by paying $US140 million for new Moly shares and providing a ten year $US60 million loan. It has also agreed to procure $US500 million in debt funding to develop the Spinifex Ridge project.
The deal will also allow Moly to repay $US150 million owed to US group Trust Company of the West, and develop a boutique $10 million small scale iron ore mine at the site.
However, it will also face a stiff test from the Foreign Investment Review Board, which has explicitly stated it would prefer to limit foreign investment in new mining developments to 49.9 per cent.
That position last month led China Non Ferrous Metal Mining to terminate a $500 million deal to fund Lynas Corporation's planned Mt Weld rare earths mine near Laverton, which would have given it just more than 51 per cent of the local company.
However, Lynas was able to raise alternative funding from Australian and institutional investors in a clear sign that conventional funding is becoming more readily available.
Other Chinese funders have also seen a combination of FIRB concerns and increased competition from non-Chinese rivals stymie their acquisition and investment plans.
Last week, mining giant BHP Billiton stitched up a $204 million friendly takeover of iron ore junior United Minerals Corporation to acquire the high grade Railway deposit adjacent to its existing Pilbara operations.
The move came after UMC had agreed to a higher-priced $30 million cash injection from China Railway Materials Corp that would have delivered it a strategic 11 per cent stake.
Chinese banks also missed the opportunity to secure a dominant stake in iron ore miner Fortescue Metals Group, which last month became impatient with the slow progress of a proposed $US6 billion expansion funding package from China. Fortescue will now self-fund its initial expansion.
