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Chinese banks take lead roles on Aus deals

Chinese banks take lead roles on Aus deals

Mallesons Stephen Jaques has acted for four Chinese banks as the lead arrangers on a US$1.2 billion financing for the Karara iron ore project in Western Australia.

Karara is a joint venture between Gindalbie Metals Limited and Ansteel, China’s second largest steel producer and largest iron ore miner.

Mallesons said today the deal highlights an increase in Chinese banks’ willingness to take a clear lead role on such transactions.

The firm advised the financiers of the loan, a syndicate of banks led by China Development Bank Corporation and Bank of China Limited as mandated lead arrangers as well as Industrial and Commercial Bank of China Limited and Agricultural Bank of China Limited on the loan facility.

The Mallesons legal team was led by Perth banking partner Nicholas Creed, who says the deal represents the emergence of a strong trend in financing for Australian mining projects. It is among the first Chinese bank funded project financings in Australia.

Clifford Chance, led by partner Bruce Schulberg and associate Paul Wee, acted as English counsel for the banks.

“We’re seeing an increase in the willingness of Chinese banks to not only finance resources projects in Australia, but also take a clear lead role on these transactions,” Creed said.

“Our clients on the Karara financing were very keen to ensure that all aspects of the deal were completed in line with international best practice, demonstrating that Chinese banks are involved in project financings in the same way Western banks have been doing for years,” he said.

Mallesons’ role on the transaction involved advising the banks on the Australian security aspects, due diligence and the facility documents.

The team included senior associates Neil Kingsbury, Paul Lingard, Sarah Harlock, Nicole Ho and legal consultant and environmental law specialist Lee McIntosh.

Mallesons' Canberra office assisted in relation to the Foreign Investment Review Board aspects of the transaction through special counsel Malcolm Brennan.

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