16 April 2010 China/ Hong Kong – DLA Piper and its alliance firm DLA Phillips Fox have advised China Coal Import & Export Company (CCIEC), on the acquisition of a majority stake in a Queensland coal asset and the establishment of a joint venture agreement with MetroCoal Limited that will be managed by CCIEC.
DLA Piper partner Wan Li in Shanghai and DLA Phillips Fox partner Eugene Fung advised on the deal.
Under the terms of the Agreement, CCIEC has acquired a 51% interest in MetroCoal’s Columboola coal exploration acreage in the Surat Basin, Queensland for $30 million.
The deal secured for MetroCoal a substantial joint venture partner with valuable technical skills and expertise, particularly in underground coal mining, and for CCIEC, the opportunity to confirm a major resource and future thermal coal supply base in one of Queensland’s premier coal producing regions.
“With still limited competition to buy foreign assets, Chinese companies today have a lot of opportunity to succeed in outbound acquisitions. For many, including CCIEC, the joint venture route is an optimal strategy. However, for other firms, other forms of partnership may be more viable and will depend on a careful consideration of the business, legal and cultural challenges particular to their industry as well as their own operating style and goals,” said Wan Li.
“Unlike many joint ventures, the Chinese side is taking a lead role as the joint venture manager, flagging potentially a more hands on approach to future Chinese investments,” said Eugene Fung.
Alastair Da Costa, Asia Managing Director of DLA Piper, added: “Cross-border partnerships are on the rise as economies gather pace in most parts of Asia. To help our clients succeed locally and internationally, we assemble the best teams from our various practice areas and jurisdictions to provide a full-service offering.”
(CCIEC) is a subsidiary of China National Coal Group Corp (China Coal), a Chinese state-owned enterprise. In 2009, China Coal ranked second in terms of coal production and sales revenues in the Chinese coal industry for six consecutive years.
The deal is one of a number of inbound and outbound transactions between Australia and China that DLA Piper and DLA Phillips Fox are working on seamlessly for both Australian and Chinese clients.
Local Brisbane firm, Hopgood Ganim acted for MetroCoal Limited.