Aquila and Mineral Resources in talks to thwart Baosteel bid

Aquila Resources and new strategic stakeholder Mineral Resources said yesterday that they plan to announce a deal that could thwart Chinese steel giant Baosteel Resources' US$1 billion bid for Aquila.

Aquila and Mineral Resources both sought trading halts on their shares, saying they aimed to make an announcement on a deal by tomorrow. Spokesmen for both firms declined to comment on the nature of the deal.

At stake is the US$7 billion West Pilbara Iron Ore mine, rail and port project, which has been on hold for nearly two years, as Aquila has not been able to fund its 50 per cent portion of the massive project.

Mineral Resources bought a 13 per cent stake in Aquila last week in the hope of securing a deal with Baosteel to sell its stake in return for a construction contract on the project.

It bought its stake for A$197 million (HK$1.43 billion), or A$3.75 a share - a 10 per cent premium to Baosteel's offer for Aquila. That raised hopes that Baosteel and Aurizon might raise their bid to win Mineral Resources' support.

However, Baosteel and Aurizon said on Friday that they would not raise their A$3.40 a share offer, valuing Aquila at A$1.42 billion, as it was pitched at a 39 per cent premium to Aquila's share price when announced in May.