Sinosteel’s Midwest bid seen as a marker

The proposed takeover of the Australian company Midwest Corporation will be worth watching.

The putative buyer, Sinosteel, is effectively offering $6.38 a share in a revised bid worth some $1.36 billion.

If the bid succeeds, Sinosteel would become the first Chinese company to achieve such a take-over in Australia.

It would then own a big slice of the iron ore in the mid-west of Western Australia.

Success seems likely as the Midwest corporation is recommending the bid to its shareholders.

But there are still hurdles.

Sinosteel needs to secure more than 50 per cent of Midwest’s shares to succeed.

And it must win the approval of the Federal government.

That would seem to be no great problem, as the Prime Minister, Kevin Rudd, has assured Chinese leaders that they will not strike discrimination in their business dealings in Australia.

However, several similar proposals are now banked up, awaiting approval.

And Chinese officials are starting to suspect that the Rudd government is, indeed, reluctant to approve their plans for participation in Australia’s resource industries.

The delays are said to be occurring in the office of the Treasurer, Wayne Swan, rather than in the processes of the Foreign Investment Review Board, which is part of the Federal Treasury.

So far, the government has offered no explanation.

Officials have said, though, that it will not apologise for taking the time necessary to properly assess applications of this kind.