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Foreign investment proposal Cliffs Western Australian Mining Co Pty Ltd



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TREASURER

EMBARGO /G./O. fcO

NO. i^3 v

STATEMENT BY THE TREASURER, THE HON JOHN HOWARD, MP

FOREIGN INVESTMENT PROPOSAL CLIFFS WESTERN AUSTRALIAN MINING CO PTY LTD

The Government has given approval under foreign investment

policy to separate proposals by CRA Ltd (CRA) and Cliffs

International Investments Inc (Cliffs) to acquire from

Texasgulf Inc (Texasgulf) that company's 35 per cent

shareholding in Cliffs Western Australian Mining Co Pty Ltd

(CWAM) which holds a 30 per cent interest in the Robe River

iron ore mining project in Western Australia,

The proposals have been examined under the Foreign Takeovers

Act 1975 and foreign investment policy as it applies to

acquisitions or increases of substantial interests in Australian

businesses. Such proposals are considered against the criteria

set out in the policy to determine whether or not they would be

contrary to the national interest. One of the main objectives

of the policy is to seek Australian participation to the extent

appropriate to the particular circumstances, with specific

guidelines for Australian involvement in new natural resource

projects \

The CRA proposal is part of a larger proposal recently

announced by the company to acquire, subject to Government

,approval, all of Texasgulf1s iron ore interests in Western

Australia. Cliffs1 proposal arises from rights under a

Stockholders Agreement of 1972, under which a shareholder in

CWAM intending to sell its shares must first offer them for

purchase by the other shareholders. Cliffs, on behalf of the

other shareholders, wishes to exercise that right but is

prepared to offer the shares to Australians.

In its consideration of the two proposals the Government has

had regard to their relative merits, including, inter alia,

their prospects for increasing the level of Australian equity

in the Robe River project from the present level of 23.1 per cent.

The CRA proposal would increase the level to 28.5 per cent.

The Cliffs proposal would involve no immediate increase but

upon the sale of the shares to Australians the level would

rise to 33.6 per cent.

The Government has considered it appropriate in this case to

approve both proposals. Its approval of the Cliffs proposal,

however, is conditional upon the shares being offered to

Australians within one year from the data of purchase, and for

further arrangements to be agreed with the Foreign Investment

Review Board if the shares have not been sold by that time.

The effect of the decision is that Cliffs will have an

opportunity to exercise its pre-emptive rights under the

Stockholders Agreement 1972.

In advising the companies of its decision, the.Government

has re-affirmed its policy that any new iron ore projects

to be developed in the Pilbara, whether by the Robe River

joint venture or by others, will be expected to meat the

50 per cent Australian equity and control guidelines set

out in the foreign investment policy*

CANBERRA, ACT 16 October 198Ο