China's Baoshan Iron and Steel (Baosteel) and Australia's Aurizon Holdings launched a $1 billion bid for an Australian resources firm in a move that could break the stranglehold of giant miners Rio Tinto and BHP Billiton on the country's iron ore exports.
Monday's unsolicited A$1.14 billion ($1.06 billion) offer to take over Aquila Resources could open up a new Australian iron ore export region to supply Asian steelmakers, jump starting the $7 billion West Pilbara Iron Ore project (WPIO), half-owned by Aquila.
Baosteel's move would be the biggest foray into an undeveloped iron ore project in Australia by a Chinese investor since CITIC Pacific ran into massive cost blowouts and delays on the $10 billion Sino Iron project, which started producing in 2013.
In a statement, Baosteel, China's largest listed steelmaker and 20 percent owner of Aquila, and rail company Aurizon said they will offer A$3.40 in cash per share, a 39 percent premium to Aquila's last closing price. Including Baosteel's existing stake, the offer values the target at A$1.42 billion in total.