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Arrium shares drop as bid shudders

FOREIGN suitors for Arrium continued to meet top Australian politicians on Thursday, as their vow to abandon a takeover bid prompted a big sell-down of the iron ore miner and steel maker.

Arrium shares slumped by more than 12 per cent on Thursday following the consortium's vow late on Wednesday to abandon the acquisition attempt.

The ensuing sell-down took the stock to its lowest price since the prospect of a takeover was first publicised on October 1, with Arrium closing 10¢ lower at 68.5¢.

But as the sell-down gathered pace, key members from the consortium were in Adelaide meeting South Australian Premier Jay Weatherill.

Mr Weatherill's state is home to Arrium's steel factory and port at Whyalla, while the company's various iron ore assets are also scattered around South Australia.

It was unclear whether the consortium - which involves Korean steel company Posco, commodities trader Noble Group and Korean investment funds - gave any indication to Mr Weatherill about its plans for Arrium, but the Premier confirmed a meeting took place.


"The minister and I met with representatives from Steelmakers Australia at their request this afternoon … The interests of South Australia are centred on ensuring that we have a secure, sustainable steel-making industry at Whyalla," he said.

"We are also keenly interested in the jobs at Whyalla steelworks and the potential for greater employment as iron ore mining in South Australia grows."

The consortium met federal ministers in Canberra on Wednesday.

The views of federal regulators would be an important factor in any takeover of Arrium, given that some of Arrium's iron ore is within sensitive Defence Force land, where foreign interests have previously been banned from operating.

It is believed the consortium did not ask about the Defence land during at least one of the meetings it held in Canberra.

The consortium has been seething that Arrium executives will not hold discussions relating to the bid, and one observer close to the deal quipped: ''It's easier to get a meeting with cabinet ministers than [Arrium chairman] Peter Smedley.''

Mr Smedley has rejected the two offers from the consortium as being ''opportunistic'', declaring that the second, improved offer price of 88¢ a share was still significantly short of a price that would attract serious attention.

Records show that Arrium's fourth-biggest shareholder, fund manager Dimensional, sold some of its holding into the takeover speculation last week.

Dimensional sold close to 2.34 million of its 67 million shares when the price was just over 80¢. The sale was enough for Dimensional to fall below the level required to be a substantial shareholder.