China Metallurgical Group Corp., or MCC, has approached nickel miner Minara Resources Ltd. (MRE.AU) to launch a joint bid for BHP Billiton Ltd.'s (BHP) idled Ravensthorpe nickel mine, a person familiar with the situation said this week.
Minara and MCC have emerged as strong contenders given their technical experience with nickel laterite mines and the pair teaming up would significantly lessen competitive tension in BHP's attempt to sell the failed operation.
Final bids are due Wednesday, and aside from MCC and Minara, Poseidon Nickel Ltd. (POS.AU) and Canada's First Quantum Ltd. (FM.T) remain in the running, a second person familiar with the sale process said.
Poseidon has a market capitalization of only A$44 million and is lacking the financial muscle to purchase Ravensthorpe. First Quantum is cash-rich but is focused on copper production and only has early-stage nickel projects.
BHP is seeking up to A$500 million for the mine but the acquirer would also have to invest substantially to improve the operation's performance as well as restart costs.
"There's a disconnect between BHP's internal thinking about the price versus reality. Ravensthorpe is a very poorly defined ore body and the company has written its value down to zero. BHP isn't having the kind of auction they want," the first person familiar said.
A BHP spokeswoman reiterated that the company was investigating divestment, restart or a permanent closure.
-By Elisabeth Behrmann, Dow Jones Newswires;
61-2-8272-4689 elisabeth.behrmann@dowjones.com