The sustained lull in iron ore prices has put iron ore miners under considerable pressure, with Chinese investors circling distressed Australian companies.
Chinese investors are circling distressed Australian iron ore miners, according to local dealmakers fielding growing interest in the commodity’s struggling mid-tier ranks.
The sustained lull in iron ore prices has put iron ore miners under considerable pressure, causing market values to plummet and a handful of Australian producers to suspend operations.
The price of iron ore has slumped close to 50 per cent in the past 12 months to hover at around $US63 a tonne, after slumping as low as $US47 a tonne in April.
Against this backdrop, an increasing number of Chinese entities had expressed interest in providing debt or equity to iron ore miners, acquiring an asset or attempting a takeover, Minter Ellison West Australian managing partner Adam Handley said.
Mr Handley said Chinese groups had shown capacity to acquire major interests in distressed assets in the past, particularly after the Global Financial Crisis, and were again beginning to show interest in striking deals in iron ore.
“It is a trend that is developing as we have seen it emerge over the last two or three months and I think its gathering some pace,” Mr Handley said. “Certainly, we are fielding an increased level of inquiry or interest in a number of mid-tier players. I think there is an opportunistic element to the current activity we are seeing with prices so low and companies which have taken a significant hit to their market caps.”
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