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Sinosteel ups stake in Australia's Midwest to 54%

Wed Jul 16, 2008 9:34pm EDT

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MELBOURNE, July 17 (Reuters) - Chinese state-owned trading firm Sinosteel has lifted its stake in Australian iron ore explorer Midwest Corp MIS.AX to 54 percent, with its takeover offer due to close on Friday.

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Its A$1.36 billion ($1.33 billion) offer for Midwest triumphed over a bid from Midwest's rival Murchison Metals Ltd (MMX.AX), which has iron ore prospects near Midwest's.

Murchison and its main shareholder, U.S. hedge fund Harbinger Capital, as well as Midwest director David Law all have big stakes in Midwest that will stop Sinosteel from reaching the 90 percent acceptances it needs to force out minority shareholders.

Harbinger this week increased its stake in Midwest to 15 percent, while Law owns 13 percent. Murchison owns 10 percent.

Murchison and Midwest are trying to develop iron ore mines in the Yilgarn region of Western Australia, where the ore was considered unprofitable to mine until prices started soaring in recent years to feed China's construction boom. ($1=1.03 Australian Dollar) (Reporting by Sonali Paul)

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