Australia's Oz Minerals Attracts Chinese Suitors

Oz Minerals, the world's second-largest zinc miner that is scrambling to refinance its debt, has attracted the interest of several Chinese metals companies, three sources with direct knowledge of the matter said.

Chinese oil and metals group CITIC Resources is among the companies exploring potential investments at the struggling Australian miner, two of the sources told Reuters .

Other Chinese suitors interested in Oz Minerals include China's state-owned metals companies Minmetals Corp and Chinalco, parent of Aluminum Corp of China (Chalco), said the sources, who did not want to be named due to client sensitivities.

Oz Minerals declined to comment. The Chinese companies could not immediately be reached.

It's not clear what Oz Minerals asset, if any, a Chinese metals company would want to buy or invest in. Oz Minerals is also a miner of nickel, copper, gold and silver.

Chinese companies have had their sights set on Oz Minerals for nearly a year, sources said, attracted to its commodity base at a time when China was scouring the region for deals to feed its construction boom.

Commodity prices have since plunged, giving Chinese buyers the chance to purchase assets for far cheaper than they could have a year ago.

Shenzhen Zhongjin Lingnan Nonfemet, China's third-largest zinc producer, on Tuesday offered A$45.5m ($29.8m) for control of Australian zinc miner Perilya Ltd, taking advantage of tumbling market values to secure supply.

Oz Minerals Ltd, facing sharp falls in selling prices for its minerals, said on 1 December it was given one month instead of two by its lenders to come up with a way to refinance $560m in debt.

Oz Minerals has also been granted a month-long share trading suspension by regulators, fearing the negotiations will be hindered by volatility in its share price.

The extension to restructure its debt until 29 December is a month short of the 31 January, 2009, extension it was seeking.

Oz Minerals last week said it will cut production at its giant Century zinc mine by 4% in 2009 and delay A$495m ($323.5m) in copper and gold mining projects, joining a growing number of miners forced to trim output as slowing global economies knock demand and prices.

By James Regan, Reuters