Baosteel of China agreed to buy a massive iron ore reserves in Western Australia after Mineral Resources denied to take over the control of Aquila Resources.
This move made the way for Baosteel to hold up new iron ore supply and can reduce the risk of higher prices of iron ore in near future. Last week Mineral Resources bought about 13% share of Aquila Resources and during Monday they made a share swap take over worth $1.5 billion for Pilbara
Aquila has targeted at $1.4 billion cash takeover bid from steelmaker Baosteel and rail operator Aurizon, because both the companies involved to kick start the delayed $10 billion West Pilbara Iron Ore Project. Tony Poli, Aquila chairman determined to accept the offer of Baosteel and Aurizon, while other shareholders have time until July 11 to accept the offer. Tony Poli holds a share of 29 percent in the company.
Analysts said that Baosteel bid is more likely to continue, because China was looking for stable supply of steel making ingredients. Morningstar Resources analyst Mathew Hodge said that Baosteel wanted the control of Aquila and he added that the West Pilbara Iron Ore project would be financed only with the Chinese money.
Michael McCarthy, CMC Markets analyst said that the Mineral Resources had already closed the dealings with the Aquila board and would try to maintain a friendly relationship for securing future deals.
Aquila shares were up 23 cents, or 7.3 per cent, at $3.36 at 1355 AEST, while Mineral Resources shares went down to 28 cents, or 2.8 per cent, at $9.28.