New Chinese bids shot down

       China's efforts to gain a greater stake in Australia's resource sector floundered yesterday when a Chinese miner terminated a US$400 million deal for a controlling stake in Australian rareearths miner.
       China Nonferrous Metal Mining (Group) Co Ltd terminated its bid for Lynas Corp, owner of the world's largest undeveloped deposit of rare earths, citing stiff conditions imposed by Australia's Foreign Investment Review Board.
       The investment review board had demanded CNMC reduce its ownership to below 50% and take a clear minority of board seats in Lynas.
       "As a result of additional undertakings recently sought by the Australian Foreign Investment Review Board, CNMC has terminated the CNMC transaction," it said.
       There is strong public and political opposition in Australia to China's moves to gain a greater hold of its resource sector.
       Earlier yesterday, the Australian Defence Mepartment rejected a separate Chinese investment in an outback mining venture, saying it threatened national security.
       The proposed project is a joint venture between Wugang Australia Resources,a wholly-owned unit of Chinese stateowned Wuhan Iron and Steel, and Australia's Western Plains Resources.
       Australia's Defence Ministry said it would not support the Chinese magnetite resource investment inside the vast outback Woomera missile range, used as a weapons-testing ground by the military and key Australian allies.
       The military's lack of support means there is virtually no chance that approval will be given.
       Both decisions come at a time of strained diplomatic ties between Canberra and Beijing after an Australian executive working for Anglo-Australian miner Rio Tinto was arrested in China and accused of commercial spying.
       "For a long time, China has had an open policy when it comes to foreign companies investing here. We hope other governments can take the same position when it comes to Chinese firms," Foreign Ministry spokeswoman Jiang Yu said yesterday.
       China's government, anxious to secure access to Australian resources, became upset at the failure this year of a $19.5 billion tie-up between state-owned metals firm Chinalco and Rio Tinto after Rio walked away from the deal.
       In April, Swan rejected Chinese stateowned firm Minmetals'$2.26 billion bid to acquire debt-stressed OZ Minerals on national security grounds, saying the local firm's main mine lay too close to Woomera. Australia finally approved a revised deal whereby Minmetals would buy OZ Minerals' other mines.
       Australian Defence Minister John Faulkner said yesterday the ministry's rejection of the Chinese/Woomera deal had nothing to do with China, but was purely a security issue.
       "Defence looks at these issues. Its assessment considers issues such as safety concerns, its likelihood to interfere with Defence's weapon testing activities,"he said.