Sinosteel's bid for outback uranium

THE Chinese have moved to buy into Australia's booming uranium industry, with steelmaker Sinosteel yesterday applying to develop a $160 million mine in the South Australian outback, posing a further challenge to foreign investment controls.

THE Chinese have moved to buy into Australia's booming uranium industry, with steelmaker Sinosteel yesterday applying to develop a $160 million mine in the South Australian outback, posing a further challenge to foreign investment controls.

The cashed-up Beijing-based consortium is eyeing opportunities in Australian resources, testing the Government's will to regulate Chinese investment in the sector.

Treasurer Wayne Swan already faces a tough foreign investment decision over a bid by Sinosteel for up to 100 per cent of West Australian iron ore miner Murchison Metals.

But Sinosteel yesterday insisted that its joint venture to develop a uranium ore deposit at Crocker Well, 400km northeast of Adelaide, had been approved by the Foreign Investment Review Board under the former Howard government. Sinosteel has a 60 per cent share in the joint venture company, with the remainder held by publicly listed PepinNini Minerals.

Sinosteel PepinNini Curnamona Management yesterday lodged a minerals claim with the South Australian Government, the precursor to a formal mining lease application.

Mike Rann's state Government is Labor's strongest advocate of uranium mining, having backed a new mine at Honeymoon near the Crocker Well site, and generally welcoming further investment in the industry.

Were it to proceed, the Crocker Well operation would be Australia's sixth uranium mine, and the fourth to receive approval in South Australia, after the federal ALP dumped its no-new-uranium-mines policy last year.

Joint venture managing director Fusheng Gao yesterday said that FIRB approval had been granted for the investment before Sinosteel bought into the joint venture company.

It would be the first investment Sinosteel has made in uranium mining, and underlines the Chinese giant's determination to use some of its $18 billion in annual revenues to snap up Australian resources.

This has raised concern about the potential for Chinese buyers of Australian mineral exports such as iron ore and coal to "vertically integrate" by gaining direct control of mines.

China is an emerging market for Australian uranium, with shipments due to begin later this year, according to Resources and Energy Minister Martin Ferguson.

Unlike India, which is also interested in Australian uranium, China is a signatory to the Nuclear Non-Proliferation Treaty, removing any legal impediment to exports of the nuclear fuel.

Asked to clarify whether the company believed it would require additional FIRB approval to proceed with the Croker Well mine, a spokeswoman said: "Their understanding is that there is no further FIRB approval required."