China is furious after Rio Tinto abandoned its deal with China's Chinalco to tie up with BHP. HONG KONG -- Rio Tinto's decision to abandon its tie-up with Chinese state-owned Chinalco and to form a joint venture with BHP Billiton has been widely criticized by the Chinese side as disrespectful and immoral. In punishment, China is imposing trade sanctions against the two Anglo-Australian miners. http://www.forbes.com/2009/06/12/china-rio-bhp-markets-commodities-revenge.html?partner=alerts
China has been becoming more aggressive in the past few months on the world stage. To me, this is exposing their weakness. They have too many dollars and treasuries, which is their fault due to their dollar peg, and are now stuck with worthless savings. They are trying to find places to swap their paper for hard assets, but there's nothing available that will absorb the size. If they traded all their dollars for hard assets too quickly, they would drive up prices, then when they were done, they would be stuck with severely overpriced assets. They cannot continue to suppress free exchange of ideas, and be welcome to invest strategically on the world stage.
Thanks for posting this. I had heard someone talking about this, but it was unclear what they were saying, and this article clears it up. I think this is going to tend to reinforce the notion that China won't play as nice as some had expected once it gains more leverage over whomever it is dealing with. I think Korea and Japan tend to view China and Chinese motivations with a lot of trepidation, as did Korea view Japan for a long time.
China might push harder but others don't like it neither. On the other hand, we have OPEC and state oil firms. So, why everyone is bullying little old Australia? ================== http://www.intellasia.net/news/articles/resources/111267027.shtml BHP, Rio venture opposed by steelmakers in China, Europe, Japan 11-JUN-2009 Intellasia | Bloomberg 11 Jun, 2009 - 7:00:00 AM Steelmakers in China, Europe and Japan said the planned iron ore joint venture between Rio Tinto Group and BHP Billiton Ltd, the world's second- and third- largest producers of the raw material, would limit competition. The tie-up "would not be in the interests" of the steel industry or Europe's economy, the Brussels-based European Confederation of Iron and Steel Industries, also known as Eurofer, said today in an e-mailed statement. The China Iron & Steel Association said it "firmly objects" to the deal. This kind of agreement "hints heavily of monopoly," the Chinese group said in a statement on its Web site. The Japan Iron & Steel Federation also objected, commenting in a release posted on its Web site. Rio agreed last week to the venture with BHP in return for $5.8 billion, which it will use to help pay down debt. The companies said the plan to combine their iron ore assets in Western Australia may save them more than $10 billion. The Australian state provides 18 percent of the world's iron ore. "We will be calling on the European Commission to use its regulatory powers to ensure that competition concerns are addressed," Eurofer director general Gordon Moffat said in the statement. BHP last year dropped a bid for London-based Rio, citing turmoil in global markets, slumping demand for commodities and Rio's debt. The deal announced last week "is a restrictive move on competition in virtually the same way" as Melbourne-based BHP's offer for Rio, said the Japanese federation, whose members include Nippon Steel Corp. and JFE Holdings Inc. Separate Marketing The venture concerns production and both mining companies will maintain "separate and highly competitive marketing units" to sell the iron ore, Rio spokesman Nick Cobban said today by phone from London. BHP's London-based spokesman Illtud Harri declined to comment. BHP Chief Executive Officer Marius Kloppers said June 5 the maintenance of separate sales and marketing operations by the companies would make the deal less "onerous" than a takeover. The venture should be blocked because it isn't in the public interest, the World Steel Association said June 5. The accord doesn't allay the "far greater competition issues that we were, and are still, concerned about," director general Ian Christmas said. Cia. Vale do Rio Doce, which is based in Rio de Janeiro, is the world's largest producer of iron ore.
So much for the buyout of Rio Tinto being a "business deal" . I guess the business deal includes asking your friends in government to impose trade sanctions. I'm proud of the Aussies, they should actually make a profit on THEIR resources.
You guys think the blow up of the China tinto deal was politically inspired? I mean, why should the US and Europe allow China to take such a major stake in what some might call a strategic enterprise?
Looking for hard assets ? Welcome Russia ! http://www.russianamericanchamber.org/newsletter/Natural_Storehouse.html Russia's land mass is the largest in the world. Russia holds the world's largest natural gas reserves (1,700 trillion cubic feet in proven reserves. Russia has the world's largest oil reserves. Russia has the second largest coal reserves (173 bn short tons). The U.S. estimate of Russia's potential Arctic reserves: 100 bn barrels of oil (Russian estimates are more modest at 50 bn barrels of oil. Russia has the world's fifth largest lead reserves. Most Russian oil is in Siberia, but deposits between the Volga and Ural Rivers (north of Kazakhstan) are often referred to as the "Second Baku". Russia has the largest reserves of water in lakes. Russia has the world's largest diamond deposits and second largest potassium reserves. Russia's forest resources, known as the Taiga, are larger than America's mainland and comprise 25% of the World's forests. They contain over one third of the world's timber and numerous animal resources including bear, moose, elk, deer, wolves. Russia has enormous fish reserves off its coasts, including salmon, cod and herring. Russia has 20% of the world's fresh water resources, or ranks first in the world. Russia's gold reserves are some of the world's largest. Other mineral reserves include uranium, asbestos, platinum, rhodium, palladium, copper, tin, bauxite, vanadium, nickel, zinc, sulfur, tungsten, cobalt, iron ore, and other precious gems. Russia has 27% of the world's reserves of iron and tin ores; over 40% of the platinum group minerals and 35% of nickel reserves. Source: various sources, including Ministry of Natural Resources of the Russian Federation official web site http://www.mnr.gov.ru/part/?pid=397