Worries over Chinese mine buyout
Are parties connected to the Chinese Communist Party poised to snare a valuable copper resource in Queensland for a song?
That's the fear of a prominent pollie, as well as plenty of mum and dad investors, who lost everything when long-troubled Brisbane copper miner CuDeco collapsed in July last year with debts of more than $189m.
A staggering $578m in shareholder value went up in smoke.
Fast forward to today and receivers appointed to sell the assets, including the mothballed Rocklands Copper Mine near Cloncurry, have struck a tentative deal with an outfit called Copper Resources Australia (CRA).
That entity is controlled by another Australian miner, which is ultimately owned by Hong Kong-based Dragon Field International Limited.
One of the receivers, FTI Consulting operative Kelly-Anne Trenfield (illustrated), told City Beat on Tuesday that CRA had bested a rival offer from Brisbane outfit Reserve Management Australia.
She said the Foreign Investment Review Board had signed off on the deal in July and, assuming a number of unspecified conditions can be satisfied, the settlement should take place before the end of the year.
"We're working diligently to get the sale through to completion,'' Trenfield said.
"Our concern is get the sale under way and let the new owners take control of the asset and get it back to into operation.''
CLOAK OF SECRECY
Citing confidentiality restrictions, Trenfield declined to divulge the dollar value of either offer.
But City Beat understands that CRA's bid came in at just under $30m, while Reserve Management's proposal was double that figure. A subsequent revised offer they lobbed even approached $90m.
Asked about those enormous differences, Trenfield maintained that "in all material respects, the Reserve Management offer was deficient''.
Yet Reserve Management boss Logan Francis noted that Chinese lenders had appointed FTI and he alleged that "the Chinese have been pulling the strings on this since it started''. Trenfield rejected this assertion, as you might expect.
Francis, who confirmed the offer figures mentioned above, told us that his company was comprised of secured creditors owed about $30m in the CuDeco disaster.
He said it was not too late for regulatory intervention to keep the Cudeco assets in Australian control.
There's also speculation that legal action afoot could derail the sale to CRA.
Last month MP Robbie Katter called for a probe of alleged corruption at the hands of Chinese stakeholders involved with CuDeco and once again flagged his alarm over foreign ownership of Australian assets.
"We continue to be deeply concerned about the erosion of our national interests by foreign interference,'' Katter said.
Investor Stuart McCullagh, who lost $3m worth of share investments in CuDeco made over 12 years, also called for intervention.
"ASIC must step up to the task of intervening in this matter and the Foreign Investment Review Board must make due and proper consideration as to the inclusion of this sale as being of benefit primarily for Australia and for Australians,'' he said.
Earlier this year, a key Chinese lender had proposed a deed of company arrangement to revitalise CuDeco but it never eventuated.
Chinese interests provided a financial lifeline for the company in the years leading up to its crash and they proved instrumental in ousting colourful founding boss Wayne McCrae in 2015.
These investors had chafed at the slow pace of developing the Rocklands project, which finally opened with great fanfare in 2016.
But it suffered several brief closures the following year before grinding to an indefinite halt in mid-2018.
The debacle seemed emblematic of the company's laundry list of woes, which included huge accumulated losses, a revolving door of managers, a frozen share price and a chronic inability to source long-term funding.
It seems incredible now but CuDeco was once briefly valued at $1bn.
Originally published as Worries over Chinese mine buyout