Jun. 12 – Melbourne-based OZ Minerals has approved the sale of its assets to China Minmetals Group for US$1.39 billion in an effort to cut debt and secure future operations.

OZ Minerals will use the money from the sale to pay its AU$1.1 billion debt and fund expansion of the Prominent Hill mine located in South Australia plus other projects in the country and overseas.

The deal will give state-owned Minmetals, China’s largest metals trader, access to the world’s second-biggest zinc mine in addition to supplies of copper, gold and nickel. This comes after the Chinalco’s failed bid to purchase Rio Tinto for US$19.5 billion; assuaging fears that the country is not open to major Chinese investment.

Last Wednesday, Minmetals increased its bid by 15 percent or US$180 million after OZ Minerals said that it received unsolicited proposals from the RFC Group and Royal Bank of Canada. Minmetals’ Australian unit will also be based in Melbourne and will maintain an estimated 70 percent of OZ Minerals employees.

“The strategy for our company is growth outside of China with a vehicle like OZ Minerals,” Mark Liu, Minmetals project director for deal was quoted by Mining Journal. “That’s how we see our future of the company. We very much rely on the expertise and experience those people bring across from OZ Minerals.”

The Minmetals bid for OZ Minerals has not been an easy path. In March, OZ Minerals was blocked from a full takeover when Australian Treasurer Wayne Swan protested the sale because of the Prominent Hill mine’s proximity to the Woomera weapon testing range thereby making it part of a military zone.

Minmetals had to change its bid to US$1.2 billion from US$1.8 billion to win Australian government approval. The revised offer scaled back the sale by not including Prominent Hill and allowing OZ Minerals to remain a listed company.