CHINA'S second biggest iron ore trader, Sinosteel, has lifted its majority stake in Midwest Corporation to 50.97 per cent.
In a change in substantial holder notice posted to the Australian Stock exchange, Sinosteel said it now held shares representing 50.97 per cent of voting power in Midwest.
Sinosteel previously held 47.14 per cent of the company.
It has been pursuing Midwest, a modest operator of iron ore mines in Western Australia's mid-west region, in a $1.36 billion takeover.
Sinosteel is targeting Midwest to gain control of the company's iron ore resources and cut its dependence on Rio Tinto (rio.ASX:Quote,News) and BHP Billiton (bhp.ASX:Quote,News) amid rising prices for the steel-making commodity.
However, fellow iron ore miner and former suitor Murchison Metals has vowed to stifle Sinosteel's attempt to swallow Midwest by not accepting the bid for its 10 per cent holding in the company, which effectively blocks a compulsory takeover.
Sinosteel's takeover attempt could be further frustrated by Murchison's largest shareholder - Harbinger Capital Partners - which holds a 9.11 per cent stake in Midwest.
Murchison proposed in May a reverse takeover for Midwest that was engineered to prevent Sinosteel, which at the time held 19.89 per cent of Midwest, from blocking the merger deal.
The reverse takeover was structured so that Midwest only required 50.1 per cent of votes cast in favour of the merger to approve the deal.
But, Sinosteel declared its takeover free of conditions and proceeded to raise its stake in Midwest.
The proposed merger fell through this week when Murchison failed to convince Sinosteel, Midwest's major shareholder, of the merits of a tie-up between the two groups.
Murchison and Midwest operate modest iron ore mines in Western Australia's mid-west region and want to develop much larger operations, depending on the construction of supporting infrastructure.
Midwest shares were steady at $6.40 by 10.07am (AEST), while Murchison gained eight cents to $2.88.
Sinosteel stake in Midwest inches up
