From the AFR:
CITIC Resources will make a $452 million strategic investment in Alumina to help the Australian company repay its bank debt.
The unexpected deal will give Hong Kong listed CITIC – once a major investor in Macarthur Coal – a 13 per cent stake in Alumina and a board seat for its vice chairman, Chen Zeng.
The placement will be conducted at $1.235 a share, a 3 per cent premium to the alumina refiner’s closing price on Wednesday.
Alumina chief executive John Bevan said the deal secured a strategic, long-term investor at a premium to the company’s recent share price and demonstrated CITIC’s confidence in the alumina industry and “unique position” in the global market.
Not a big deal in the grand scheme of things. But I wonder if this is not symbolically quite important. CITIC Resources is an offshoot of CITIC group, China International Trust and Investment Corporation, a state owned investment company that is dedicated to securing long-run strategic commodity access.
I just wonder if the shift from coal investment to alumina and aluminium refining doesn’t say something about the changing development priorities of the Chinese. Taking equity in Alumina surely means it will contribute to an expansion in the business, perhaps via cheaper Chinese capital.
If China wants to start developing high energy manufacturing capacity outside its borders then it says something about its determination to shift away from high energy usage at home, as we’ve been hearing about recently.
It also says something about the confidence that the Chinese have in the Australian carbon regime.
And possibly hints at better times ahead for Australia’s depressed downstream processing and manufacturing.
Just a thought.
