China Development Bank contributes to a loan to China Minmetals Non-ferrous Metals to facilitate the $1.354 billion USD acquisition of the majority of the assets of OZ Minerals Limited (Linked to Record ID#95167)

Project narrative

On February 16, 2009, China Minmetals Non-Ferrous Metals Co. Ltd (CMC) entered into a scheme of arrangement with OZ Minerals Limited, an Australian mining company, in which Minmetals would acquire all outstanding shares (100%) in OZ Minerals for a cash consideration of $0.825 AUD, or $2.6 billion AUD in total. While unanimously recommended by OZ Minerals' board of directors, the transaction was subject to approval of authorities in Australia, China, and OZ Minerals' lenders; if the pre-acquisition matters went as expected, the acquisition was expected to be completed in early June 2009. On March 20, 2009, the Australian Competition and Consumer Commission (ACCC) allowed the acquisition to proceed, finding its likely effect on the Australian market for zinc concentrate and copper concentrate acceptable. On March 23, 2009, Treasurer of Australia Wayne Swan issued an interim order to extend the review period for the acquisition. Then, on March 27, 2009, Swan announced an objection to the acquisition due to the inclusion of the Prominent Hill mine, a mine located in the Woomera Prohibited Area. The Woomera Prohibited Area, located in northwest central South Australia, is operated by the Royal Australian Air Force (RAAF) and is home to an RAAF airbase and military weapons testing range for ground-based and air-based weapon systems, ordnance, and hazardous materials, and other training activities. Woomera was also site of nuclear weapon tests by the United Kingdom in the 1950s and 1960s. Swan stated that Woomera "[made] a unique and sensitive contribution to Australia's national defence" and that the Australian Government would not approve Minmetals' acquisition if it included Prominent Hill in defense of its national security interests. The Prominent Hill copper and gold mine was considered OZ Minerals' flagship project; combined with OZ Minerals' lenders looking for repayment, the decree endangered both the acquisition and OZ Minerals, which was in risk of being placed in receivership in the event of a failed takeover bid. To secure Swan's approval, in addition to excluding Prominent Hill, Minmetals was required to implement six undertakings: operate the acquired mines as a separate business with commercial objectives; to operate the mines using companies incorporated, headquartered and managed in Australia under a predominantly Australian management team; to price all off-takes on arm’s-length terms by a sales team headquartered in Australia, with reference to international observable benchmarks and in line with market practice; to maintain or increase production and employment at the Century, Rosebery, and Golden Grove mines, grow Century and Rosebery mines, reopen the Avebury mine, and develop Dugald River Project, as subject to economic conditions; to comply with Australian industrial relations laws and honor employee entitlements; and to maintain and increase levels of Aboriginal employment in its local operations and honor existing agreements with Aboriginal communities. Minmetals agreed to these conditions Soon thereafter, on April 1, 2009, Minmetals put forth a second offer for OZ Minerals; instead of attempting to acquire all outstanding shares of OZ Minerals, Minmetals offered to acquire the majority of OZ Minerals assets, excluding the Prominent Hill mine, OZ's exploration assets in Cambodia and Thailand, its investments in listed entities, and the Martabe gold mine in Indonesia, for a consideration of $1.75 billion AUD ($1.2 billion USD). On April 14, 2009, Minmetals and OZ Minerals signed a binding agreement for the revised deal. On April 23, 2009 Australia's Foreign Investment Review Board (FIRB) approved the modified sale of the assets. On May 18, 2009, China's National Development and Reform Commission (NDRC) approved the purchase. On May 31, 2009, financial close on the transaction was reached. On June 10, 2009, Minmetals raised the value of its offer by 15%. On June 11, 2009, the shareholders of OZ Minerals approved the sale. To support the acquisition, China Development Bank (CDB) and the Bank of China (BOC) issued a loan to Minmetals. Record ID#95158 captures CDB's contribution. Record ID#95167 captures BOC's contribution. On June 16, 2009, OZ Minerals sold its assets to Minmetals' subsidiary China Minmetals Non-ferrous Metals Company Limited (CMN), completing the acquisition process. CMC paid OZ Minerals a final amount of $1.354 billion USD for the assets; OZ Minerals used the proceeds to repay all its bank loan facilities and was left with a cash balance of more than $575 million USD. As a result of the sale, Minerals and Metals Group — the precursor to MMG Limited — was established. The specific assets sold included: - Century Mine: an open-cut zinc and lead mine located approximately 250 kilometers north of Mount Isa, near the Gulf of Carpentaria in Queensland, Australia; - Sepon Copper Mine: an open-cut copper mine located approximately 40 kilometers north of the town of Sepon, in Savannakhet Province, Laos; - Sepon Gold Mine Mine: an open-cut gold mine located approximately 40 kilometers north of the town of Sepon, in Savannakhet Province, Laos; - Golden Grove Mine: a zinc, copper, lead, silver and gold mine, located approximately 450 kilometers north-east of Perth and 280 kilometers east of Geraldton in Western Australia; - Rosebery Mine: an underground zinc, lead, silver, gold, and copper mine located on the west coast of Tasmania, Australia; - Avebury Mine: an underground nickel mine located on the west coast of Tasmania, Australia; - Canadian Project: zinc and copper exploration projects located in Nunavut, Canada; and - Dugald River Project: a (at the time) undeveloped zinc deposit, located in northwest Queensland approximately 85 kilometers north-east of Mount Isa - a number of entities owned or partially owned by OZ Minerals; for a full list, see page.87 of "OZ Minerals Limited Annual Report 2009".