Minister averse to foreign bid

CANBERRA - Trade Minister Mark Vaile expressed concerns about the hostile bid for WMC Resources, saying the takeover could be against national interests, the Australian Financial Review reported yesterday.

Vaile, the most senior member of the Government to speak out against the A$8.4 billion ($9.2 billion) bid by Xstrata, told the newspaper domestic uranium deposits should remain in Australian hands. WMC holds 38 per cent of the world's known uranium reserves at its Olympic Dam mine.

Treasurer Peter Costello will rule on whether Xstrata can proceed with its offer after consulting with the Foreign Investment Review Board.

Vaile drew parallels between the Xstrata bid and the 2001 decision by Costello to block Royal Dutch/Shell's takeover of Woodside Petroleum on national interest grounds.

"If you think about the basis for the decision we took on the Northwest Shelf against Shell, there is a reasonable argument being mounted on this one as well," Vaile told the newspaper. "Sure there's iron ore, but there's the uranium deposits."

Asked if his comments would add to the argument the Xstrata bid was not in the national interest, the newspaper quoted Vaile as saying: "I would have thought so, yeah."

Prime Minister John Howard said the Xstrata decision would be taken in line with Australia's foreign investment laws. "There is a strict legal procedure to be followed by the Treasurer, and he will follow it," Howard said.

Costello told a closed Government party-room meeting on Tuesday he would need an overriding reason to block the Xstrata bid on national interest grounds, and he reminded parliamentarians Australia had a free-enterprise economy.

* WMC reported a record net profit yesterday of A$1.327 billion for last year, more than five times the A$245.6 million posted in 2003, as buoyant global demand for industrial commodities drove nickel and copper prices higher.

- REUTERS