Sinosteel Will Not Increase Offer for Midwest


Chinese metals trader Sinosteel said on Wednesday it will not increase its sweetened offer for Australian iron ore prospector Midwest beyond A$6.38 a share.

Midwest has received a competing A$1.65 billion (US$1.6 billion) all-share offer from fellow Australian prospector Murchison Metals, which has an implied value of about A$7.36 a share and which it has recommended.

Midwest and Murchison are two of the biggest beneficiaries of China's roaring demand for steel, which has set the iron ore market alight, driving up prices and stirring interest in resource-rich areas.

Midwest had rejected an earlier Murchison offer, but backed the latest one while also keeping its recommendation on the sweetened offer by Sinosteel, which is seeking to secure raw material supplies for China's booming steel industry.

Sinosteel said in its statement on Wednesday that it will extend its offer until June 13. 

Midwest shares were down 0.3 percent at A$7.01 at 0338 GMT, while Murchison was down 3.6 percent at A$4.08. 

Analysts have said they don't expect Sinosteel to walk away from Midwest, which, along with Murchison, is battling to lead the development of a rich iron ore province in Western Australia and weaken the dominance of BHP Billiton and Rio Tinto.

They have said its options include waiting on the sidelines and making a bid for the merged Midwest and Murchison.

Sinosteel has a joint venture with Midwest and holds a 19.9 percent stake in it as well as holding 2.4 percent of Murchison.