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Foreign investment proposal- Oaky Creek coking coal project



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TREASURER

NO. 13 ^

EMBARGO

STATEMENT BY THE TREASURER, THE HON. JOHN HOWARD M.P.

FOREIGN INVESTMENT PROPOSAL· - OAKY flREER POKING COAL PROJECT

The Government has approved the admission of new partners into the joint venture

being formed by Houston Oil and Minerals Inc. (ROMA) to develop the Oaky Creek

coking coal project in Queensland. However, the Government considers that the

proposed equity structure for the project would be inconsistent with foreign

investment policy as it applies to the development of new mineral resources.

Following the introduction of the new partners the joint venture would be Mount

Isa Mines Limited 40 per cent, HGMA 38 per cent, and three European iron and steel

interests, Hoogovens DelfstoffenBV (9*5 per cent), Italsider SpA (7*5 per cent)

and Empresa Nacional Siderurgica SA (5 per cent).

The Government welcomes the participation of the three European companies in the

project. The European partners will provide, among other things, long term orders

for part of the output from the mine. The Government also recognises the considerable

effort that has been made towards the development of the project by HQMA.

The proposal would involve Australian equity of only about 20 per cent with

provision to increase this to 30 per cent at some unspecified time in the future.

This would fall substantially short of the Government's foreign investment .

policy guidelines which seek to achieve 50 per cent Australian equity in the

development of new mineral projects.

The parties have been advised that the Government would be prepared to give

consideration to approval for the project's development if they provided suitable

2 .

joint pnrl unequivocal undertakings that Australian equity will be introduced to

a level of at least 50 per cent by the time the first, shipments of coal take

place. It would also be necessary for them to inform the Government how they would

adjust their equity shares to admit the necessary level of Australian equity.

The Government would wish to see the Australian equity in place as soon as

possible. .

In reaching its decision, the Government took note of the attempts that had

been made some time ago by HQMA to introduce Australian equity into the project.

In this context it was r el event that a number of Australian companies have recently

expressed interest in purchasing equity in Oaky Greek. One of the purposes of

the foreign investment guidelines is to ensure, as far as possible, that

Australians are given an opportunity to participate to at least 50 per cent in

the development of the nation’s resources on reasonable terms and conditions.

CANBERRA ACT 24 September, 1980