Lenders may give OZ time amid Minmetals bid

24 March 2009

Lenders to troubled Australian mining company OZ Minerals Ltd are widely expected to extend a 31 March deadline before they force payment on their debts, according to reports, after the government decided it needed more time to assess a $1.8 billion rescue bid for the group from Chinese state-owned Minmetals.

The world's second-biggest zinc miner was thrown to the mercy of its lenders this week when Australia's Foreign Investment Review Board extended its probe into Minmetals' takeover to 22 June, well past the deadline for OZ to repay the $1.3 billion it owes.

The company said its banks have another week to make their decision. "Talks with lenders are progressing," said OZ Minerals spokesman Matthew Foran.

Two key factors would make the banks more willing to extend OZ's lifeline: Minmetals' commitment to wait for a final decision from the Australian government and improving commodity prices, a lender told Reuters. "It really depends on how certain the lenders are of Minmetals' position in 90 days, which is a long time," the source said.

Minmetals said it respected the government's review process, and was ''optimistic'' it would win approval for the bid. Copper prices touched an 18-week high this week on signs of improved demand from China and hopes for an economic recovery in the United States.

Observers, including investment analysts, lobbyists and academics, expect the deal to be approved by Australia's treasurer eventually, possibly with conditions, as it involves a full takeover by a state-owned Chinese company.