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Yanzhou considers takeover of Australia's Felix

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[August 11, 2009]  SYDNEY (AP) -- China's Yanzhou Coal Mining is in talks to buy Australian coal miner Felix Resources Ltd. in a cash takeover bid worth about 3.5 billion Australian dollars ($2.9 billion), a person close to the negotiations said Tuesday.

The Chinese miner is offering slightly less than the AU$20 per share previously mentioned in media reports, said a person close to the deal who spoke on condition of anonymity because the bid is not finalized. Shares of the Brisbane-based Felix last traded at AU$16.90.

China, which relies on coal for about 60 percent of its power and is the world's biggest coal consumer, has been buying coal and other resources from overseas to meet growing demand. But there has been some opposition in Australia to China's bids for the country's mineral resources.

Shares of Felix were suspended from trading in Australia Monday, as were shares of Yanzhou in Hong Kong. In an announcement Monday to the Australian Securities Exchange, Felix said it expected to remain suspended from trading for five days pending an announcement on a potential change of control. Felix officials declined to comment further.

A woman at Yanzhou's office for the board secretary, who would not give her name, referred questions to a statement the company posted Monday on the Shanghai Stock Exchange. In the statement, Yanzhou said it was suspending trading while it worked on a "major capital restructuring project."

In June, Anglo-Australian miner Rio Tinto Ltd. abandoned a $19.5 billion deal with state-controlled Aluminum Corp. of China, better known as Chinalco, amid concerns that a foreign state-backed enterprise would own a strategic stake in the country's biggest natural resource assets.

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Tensions between Beijing and Canberra flared in July when China detained four Rio Tinto workers -- including an Australian citizen -- on accusations of spying amid protracted talks on iron ore prices with Chinese steel mills.

Beijing has released no details about the case, but state media say the men are suspected of paying bribes for information on China's negotiating stance in iron ore price talks.

[Associated Press; By KRISTEN GELINEAU]

Associated Press researcher Zhao Liang in Beijing contributed to this report.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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