China Investment Corp is looking for investment opportunities in commodities, according to Jesse Wang, a senior official with China's $200 billion plus sovereign wealth fund.
Officials have said that CIC wants to diversify its portfolio in the natural resources sector after booking heavy losses on high-profile financial investments in private equity fund Blackstone and U.S. bank Morgan Stanley.
Wang, CIC chief risk officer, said the global recession had just begun, and as a result, bigger price declines in commodities and energy were possible.
"No matter where the company invests, it is always possible there will be book losses in a particular period," he told reporters on the sidelines of a meeting of a parliamentary advisory body.
The wealth fund will diversify its investments in the financial and energy sectors, Wang added.
A move into commodities and energy by CIC would add to a wave of investments backed by Chinese state funds in those sectors that topped $50 billion in February alone, including Russian and Brazilian oil deals and investments in Australian mining firms Rio Tinto and OZ Minerals.
For more articles on this topic click the links below
Foreign interest is all win for Australia -- The Australian
China's CIC Sees Opportunities in Natural Resources -- CNBC
China Investment Corp may diversify portfolio into commodities, energy -- Reuters via Mineweb
China to invest in undervalues commodity markets -- zionistgoldreport
Showing posts with label Rio Tinto. Show all posts
Showing posts with label Rio Tinto. Show all posts
Wednesday, March 4, 2009
Friday, February 13, 2009
China's metals move a bright spot for sector -- theglobeandmail
Chinalco investing nearly $20-billion in Rio Tinto; deal suggests Canadian resources sector could climb out of doldrums sooner
ANDY HOFFMAN
February 13, 2009
MINING REPORTER
China's blockbuster deal to invest $19.5-billion (U.S.) in Rio Tinto Group bodes well for Canada's resource-driven economy as it shows the world's largest commodities consumer is betting on a faster-than-expected recovery in metals demand.
State-controlled China Aluminum Corp. (Chinalco) is buying $7.2-billion worth of convertible bonds and will pay $12.3-billion for stakes in eight of Rio Tinto's mines that produce a range of metals including iron ore, copper and aluminum.
Click here to access the full article from theglobeandmail
ANDY HOFFMAN
February 13, 2009
MINING REPORTER
China's blockbuster deal to invest $19.5-billion (U.S.) in Rio Tinto Group bodes well for Canada's resource-driven economy as it shows the world's largest commodities consumer is betting on a faster-than-expected recovery in metals demand.
State-controlled China Aluminum Corp. (Chinalco) is buying $7.2-billion worth of convertible bonds and will pay $12.3-billion for stakes in eight of Rio Tinto's mines that produce a range of metals including iron ore, copper and aluminum.
Click here to access the full article from theglobeandmail
Monday, February 9, 2009
Rio Tinto shakeup over China deal -- Reuters
Feb 9 - The mining group's chairman-designate quits after objecting to a potential deal with state-run Chinese aluminium maker Chinalco.
Jim Leng, deputy chairman of India's Tata Steel, was named as Rio's next chairman just over three weeks ago. Current Rio Chairman Paul Skinner will now stay in the post until mid 2009 to allow time to appoint a successor.
Peter Parker reports.
Wednesday, February 4, 2009
The end of China's boom years -- perspective from Reuters Melbourne, Australia office
Ending China boom to boost BHP, Rio profit but big writedowns expected
Author: Sonali Paul
Tuesday , 03 Feb 2009
MELBOURNE (Reuters) -
Global miners BHP Billiton and Rio Tinto should post solid six-month earnings growth, but results will feature hefty writedowns and mark the end of a China-powered boom.
Brokers have cut their forecasts for the world's biggest and third-biggest diversified miners following their production reports, and investors are now focused on how cost reductions and spot sales of iron ore might have helped them shore up profits.
Rising costs had been a major problem over the past two years, in face of labor shortages and soaring energy and steel prices, but those have now eased...
Click here to access the full article from Reuters via Mineweb
Monday, February 2, 2009
Re-shuffling global assets from North to South – Vale do Rio Doce, Brazilian goes shopping for Rio Tinto's assets
The Ango-Australian mining giant, Rio Tinto Group is selling mining assets in Argentina, Brazil and Canada to Brazilian competitor Vale do Rio Doce for $1.6 billion Rio Tinto is facing tough times as it desperately tried to reduce its $39 billion debt.
Rio Tinto has reportedly already sold over $3 billion of assets. The company said “the latest sales represent a major step towards meeting its goal to reduce debt from $39 billion to $10 billion.
Did a bit of research and Vale do Rio Doce doesn't seem to have much debt. Which is a really good thing for miners right now! With commodity prices as low as they are, servicing debt is a dangerous thing. .
Vale however, because it saved it's penny's during the good times has managed to scoop up two of Rio's prized operations in Argentina and Brazil for pretty good price. Vale do Rio Doce paid $850 million for Rio's major potash operation in Argentina; and in Brazil it paid $750 million for the Corumba iron ore mine.
Citigroup analyst Clarke Wilkins said “the sale highlights good prices for assets can still be achieved in the current market. Indication that the assets are still perceived as viable long term investments even though commodity prices are so low. It may take time for them to recover, but when they do Vale do Rio Doce will make money from this purchase.
Check out what the stock has been doing recently. Good buy? Hmmmm.
Rio Tinto has reportedly already sold over $3 billion of assets. The company said “the latest sales represent a major step towards meeting its goal to reduce debt from $39 billion to $10 billion.
Did a bit of research and Vale do Rio Doce doesn't seem to have much debt. Which is a really good thing for miners right now! With commodity prices as low as they are, servicing debt is a dangerous thing. .
Vale however, because it saved it's penny's during the good times has managed to scoop up two of Rio's prized operations in Argentina and Brazil for pretty good price. Vale do Rio Doce paid $850 million for Rio's major potash operation in Argentina; and in Brazil it paid $750 million for the Corumba iron ore mine.
Citigroup analyst Clarke Wilkins said “the sale highlights good prices for assets can still be achieved in the current market. Indication that the assets are still perceived as viable long term investments even though commodity prices are so low. It may take time for them to recover, but when they do Vale do Rio Doce will make money from this purchase.
Check out what the stock has been doing recently. Good buy? Hmmmm.
Thursday, January 15, 2009
News reel: Economic Meltdown p3 – Commodities
Click on article titles to access the full copy from parents websites
Gold Little Changed in Asia as Dollar Steady Before ECB Meeting – Bloomberg LP - Jan 15, 2009
Jan. 15 (Bloomberg) -- Gold traded little changed in Asia as the dollar steadied before a European Central Bank meeting where interest rates are widely expected to be cut by at least half a percentage point. Platinum declined.
Resources downturn trips up contractors – The Australian – Jan 16, 2009
MINING companies slashing costs and cutting production as they struggle to cope with the global financial crisis is driving down revenue in Australia's engineering, contracting and services sectors.
Although analysts believe that the diminished income and the prospect of further contract cancellations are already being incorporated into share prices, they said the full impact had not yet been incorporated.
Metal meltdown rocks global miner Rio Tinto – The Australian – Jan 16, 2009
RIO Tinto continues to be battered by the global slowdown, with fourth-quarter iron ore sales falling 31 per cent.
Slumping metal prices are set to wipe more than $US500 million ($758 million) from the miner's bottom line and more aluminium production cuts have been flagged.
Under new management, miner ready to tackle debt – The Australian – Jan 16, 2009
RIO Tinto's board has shown it is serious about its turnaround by dumping chairman Paul Skinner 11 months ahead of plan. And yesterday's 18 per cent fall in iron ore production underlined the magnitude of the cutbacks ahead.
Rio's fourth-quarter production report is, of course, just a warm-up to the real event on February 12, when its half-year profits are released.
Oil Falls Below $34 After OPEC Reduces 2009 Demand Forecast – Bloomberg – Jan 15, 2009
Jan. 15 (Bloomberg) -- Crude oil fell below $34 a barrel after OPEC said that demand for its crude will decline 4.2 percent this year as the recession in the U.S., Europe and Japan curbs fuel use.
Natural Gas Falls After U.S. Supplies Drop Less Than Forecast – Bloomberg – Jan 15, 2009
Jan. 15 (Bloomberg) -- Natural gas fell to the lowest in more than two years in New York as government reports today on gas stockpiles, producer prices and manufacturing pointed to slower demand as the U.S. recession deepens.
Stockpiles declined 94 billion cubic feet last week, less than the 102 billion analysts expected, an Energy Department report showed. Prices paid to producers in the U.S. dropped for the fifth straight month and manufacturing in the New York and Philadelphia areas shrank. Slowing demand from factories and power plants has helped send gas down 15 percent this month.
Copper Prices Drop for Second Day in N.Y. as Stockpiles Rise – Bloomberg – Jan 15, 2009
Jan. 15 (Bloomberg) -- Copper futures fell for a second straight day as climbing inventories signaled global output of the metal is exceeding demand.
Stockpiles monitored by the London Metal Exchange climbed 1.4 percent to 387,325 metric tons today and have jumped 14 percent this month after surging 72 percent last year. Before today, copper prices plunged 65 percent from a record in May as slumping global growth slashed demand for the metal used in pipes and wires.
Soybeans Prices Jump on Adverse Weather in Argentina, Brazil – Bloomberg – Jan 15, 2009
Jan. 15 (Bloomberg) -- Soybeans prices jumped on signs that demand for U.S. supplies will increase as adverse weather damages crops in Argentina, the world’s biggest exporter of vegetable oil and animal feed made from the oilseed.
Australia Expects ‘Significant’ Drop in Coal, Iron Ore Prices – Bloomberg – Jan 15, 2009
Jan. 15 (Bloomberg) -- Export prices for coal and iron ore from Australia, the world’s biggest shipper of the raw materials, may drop significantly this year as slowing industrial growth curbs demand, the nation’s central bank said.
Gold Little Changed in Asia as Dollar Steady Before ECB Meeting – Bloomberg LP - Jan 15, 2009
Jan. 15 (Bloomberg) -- Gold traded little changed in Asia as the dollar steadied before a European Central Bank meeting where interest rates are widely expected to be cut by at least half a percentage point. Platinum declined.
Resources downturn trips up contractors – The Australian – Jan 16, 2009
MINING companies slashing costs and cutting production as they struggle to cope with the global financial crisis is driving down revenue in Australia's engineering, contracting and services sectors.
Although analysts believe that the diminished income and the prospect of further contract cancellations are already being incorporated into share prices, they said the full impact had not yet been incorporated.
Metal meltdown rocks global miner Rio Tinto – The Australian – Jan 16, 2009
RIO Tinto continues to be battered by the global slowdown, with fourth-quarter iron ore sales falling 31 per cent.
Slumping metal prices are set to wipe more than $US500 million ($758 million) from the miner's bottom line and more aluminium production cuts have been flagged.
Under new management, miner ready to tackle debt – The Australian – Jan 16, 2009
RIO Tinto's board has shown it is serious about its turnaround by dumping chairman Paul Skinner 11 months ahead of plan. And yesterday's 18 per cent fall in iron ore production underlined the magnitude of the cutbacks ahead.
Rio's fourth-quarter production report is, of course, just a warm-up to the real event on February 12, when its half-year profits are released.
Oil Falls Below $34 After OPEC Reduces 2009 Demand Forecast – Bloomberg – Jan 15, 2009
Jan. 15 (Bloomberg) -- Crude oil fell below $34 a barrel after OPEC said that demand for its crude will decline 4.2 percent this year as the recession in the U.S., Europe and Japan curbs fuel use.
Natural Gas Falls After U.S. Supplies Drop Less Than Forecast – Bloomberg – Jan 15, 2009
Jan. 15 (Bloomberg) -- Natural gas fell to the lowest in more than two years in New York as government reports today on gas stockpiles, producer prices and manufacturing pointed to slower demand as the U.S. recession deepens.
Stockpiles declined 94 billion cubic feet last week, less than the 102 billion analysts expected, an Energy Department report showed. Prices paid to producers in the U.S. dropped for the fifth straight month and manufacturing in the New York and Philadelphia areas shrank. Slowing demand from factories and power plants has helped send gas down 15 percent this month.
Copper Prices Drop for Second Day in N.Y. as Stockpiles Rise – Bloomberg – Jan 15, 2009
Jan. 15 (Bloomberg) -- Copper futures fell for a second straight day as climbing inventories signaled global output of the metal is exceeding demand.
Stockpiles monitored by the London Metal Exchange climbed 1.4 percent to 387,325 metric tons today and have jumped 14 percent this month after surging 72 percent last year. Before today, copper prices plunged 65 percent from a record in May as slumping global growth slashed demand for the metal used in pipes and wires.
Soybeans Prices Jump on Adverse Weather in Argentina, Brazil – Bloomberg – Jan 15, 2009
Jan. 15 (Bloomberg) -- Soybeans prices jumped on signs that demand for U.S. supplies will increase as adverse weather damages crops in Argentina, the world’s biggest exporter of vegetable oil and animal feed made from the oilseed.
Australia Expects ‘Significant’ Drop in Coal, Iron Ore Prices – Bloomberg – Jan 15, 2009
Jan. 15 (Bloomberg) -- Export prices for coal and iron ore from Australia, the world’s biggest shipper of the raw materials, may drop significantly this year as slowing industrial growth curbs demand, the nation’s central bank said.
Wednesday, January 7, 2009
China goes shopping for commodities
If you have kept up to date as I try to do with China's oversea investments in the commodity and energy sectors you're probably aware of the fact China has been shopping for commodities in emerging markets.
Africa and to a lesser extent South America where the main benefactors of China's spending spree from 2000-2008. The two continents are home to abundant supplies of natural resources China needs to sustain economic growth. The two continents are also home to various countries that are hungry for foreign direct investment in their commodity sectors which until recent had been the main fuel behind their respective economics booms.
China also had a edge up on their western counterparts in many of these countries. Some countries in Africa and South America intimidate traditional western investors due to political instability. Others have such a horrendous human rights record that many western firms are morally inclined not work in them.
With the global slow down in full swing, cash rich Chinese companies and investment groups now find themselves in a different position. Frozen credit markets, plummeting commodity prices, depressed stock market prices and a cloudy horizon in the future have led many mining companies from developed countries to search for long-term investors with the capital to keep their operations running until the global economy improves.
China has shifted its attention away from Africa, instead focusing on possible investment opportunities in Canada, Australia and South America. Keith Spence, president of Global Mining Corp, a China-focused resource investment company was quoted in a great piece published in the Financial Times yesterday.
"The Chinese realize there are massive opportunities in the market. A year ago, they were going to Africa to acquire early-stage development assets. But now they are looking for larger tonnage, longer life, later-stage assets. There is less of an emphasis on emerging markets, because now there is choice."
Last month China's largest zinc producer, Zhongjin purchased 50.1% of Australian zinc miner Perilya for $32 million usd. Chinalco, a Chinese aluminum company has suggested it may increase its stake in Rio Tinto to nearly 15%.
(click here to access the full article on this topic from the Financial Times)
I must say it is interesting to see that although China finds itself in a more lucrative buying position that it has not shunned South America. Evidence to suggest the Chinese may perceive South America as more than simply another commodity rich area in which to extract untapped resources.
Rather it may be that South America has come to represent a region that has well developed assets, worthy of purchasing for the long-term. China is forging much closer ties with fellow APEC members Chile and Peru. China is quickly working with Peru to finalize a Free Trade Agreement and already has one with Chile. China is increasing its investment in agricultural commodities in Brazil and Argentina and hopes to continue easing visa restrictions for many of its citizens on travel to the region.
Below I've included a chart of Chinese investments / cooperation with Latin American countries. I assembled this chart about 6 months ago for my independent study / thesis. If you know of any other instances of Sino-Latin America interaction please by all means let me know and I'll update this chart.
Africa and to a lesser extent South America where the main benefactors of China's spending spree from 2000-2008. The two continents are home to abundant supplies of natural resources China needs to sustain economic growth. The two continents are also home to various countries that are hungry for foreign direct investment in their commodity sectors which until recent had been the main fuel behind their respective economics booms.
China also had a edge up on their western counterparts in many of these countries. Some countries in Africa and South America intimidate traditional western investors due to political instability. Others have such a horrendous human rights record that many western firms are morally inclined not work in them.
With the global slow down in full swing, cash rich Chinese companies and investment groups now find themselves in a different position. Frozen credit markets, plummeting commodity prices, depressed stock market prices and a cloudy horizon in the future have led many mining companies from developed countries to search for long-term investors with the capital to keep their operations running until the global economy improves.
China has shifted its attention away from Africa, instead focusing on possible investment opportunities in Canada, Australia and South America. Keith Spence, president of Global Mining Corp, a China-focused resource investment company was quoted in a great piece published in the Financial Times yesterday.
"The Chinese realize there are massive opportunities in the market. A year ago, they were going to Africa to acquire early-stage development assets. But now they are looking for larger tonnage, longer life, later-stage assets. There is less of an emphasis on emerging markets, because now there is choice."
Last month China's largest zinc producer, Zhongjin purchased 50.1% of Australian zinc miner Perilya for $32 million usd. Chinalco, a Chinese aluminum company has suggested it may increase its stake in Rio Tinto to nearly 15%.
(click here to access the full article on this topic from the Financial Times)
I must say it is interesting to see that although China finds itself in a more lucrative buying position that it has not shunned South America. Evidence to suggest the Chinese may perceive South America as more than simply another commodity rich area in which to extract untapped resources.
Rather it may be that South America has come to represent a region that has well developed assets, worthy of purchasing for the long-term. China is forging much closer ties with fellow APEC members Chile and Peru. China is quickly working with Peru to finalize a Free Trade Agreement and already has one with Chile. China is increasing its investment in agricultural commodities in Brazil and Argentina and hopes to continue easing visa restrictions for many of its citizens on travel to the region.
Below I've included a chart of Chinese investments / cooperation with Latin American countries. I assembled this chart about 6 months ago for my independent study / thesis. If you know of any other instances of Sino-Latin America interaction please by all means let me know and I'll update this chart.
Thursday, June 26, 2008
China and South America in focus: China considers boycott of Australian BHP Billiton... could help Brazil's Vale
The Chinese are considering a boycott of BHP Billiton (BHP), the world's largest miner, according to a report by London-based investment bank Fairfax (article from BNAmericas).
Rio Tinto and China's Baosteel, recently announced a joint venture deal, which China now argues exports iron ore, (one of Brazil's major exports to China) at a fair market price while Australia's BHP Billiton does not...
Interesting being that it cost $45/t more to ship Iron Ore from Brazil to China than it does from Australia to China. Despite the distance, the recent 100% increase imposed by the company (BHP) on Australian iron ore, makes iron ore from the Australian mining giant with more expensive ore than China can obtain 1000's of miles away from its Brazilian counterpart.
Dangerous move for BHP, but in the end it might work out considering that BHP and RIO combined export about 80% of the world's iron ore, even if RIO can hold out for a while and BHP feels the pain from the Chinese boycott, the global macro economic conditions of the commodity market, combined with the market share BHP currently retains may force RIO to raise its prices as well.
Pedro Galdi, an analyst at SLW Corretora brokerage firm in Brazil, stated the following:
Rio Tinto and China's Baosteel, recently announced a joint venture deal, which China now argues exports iron ore, (one of Brazil's major exports to China) at a fair market price while Australia's BHP Billiton does not...
Interesting being that it cost $45/t more to ship Iron Ore from Brazil to China than it does from Australia to China. Despite the distance, the recent 100% increase imposed by the company (BHP) on Australian iron ore, makes iron ore from the Australian mining giant with more expensive ore than China can obtain 1000's of miles away from its Brazilian counterpart.
Dangerous move for BHP, but in the end it might work out considering that BHP and RIO combined export about 80% of the world's iron ore, even if RIO can hold out for a while and BHP feels the pain from the Chinese boycott, the global macro economic conditions of the commodity market, combined with the market share BHP currently retains may force RIO to raise its prices as well.
Pedro Galdi, an analyst at SLW Corretora brokerage firm in Brazil, stated the following:
"In reality, Vale- Rio Tinto (RIO) and BHP account for 80% of global [iron ore] mining needs. Demand is higher than supply and it's hard to imagine one of these players leaving this market, or selling iron ore at spot prices, which could be bad for everyone," said Pedro Galdi.
"I do believe this is going to become a duel of giants but it's still too early to say that BHP is going to be selling at spot prices during this year, especially with its acquisition attempt of Rio Tinto. We have to wait until June 30 to see what is going to happen," Galdi said.
Once again, if you would like to read the full article please visit BNAmericas or click here for a direct link to the publication.Sunday, June 15, 2008
Bloomberg LP - Mining giant Rio says rising commodity prices won't be enough to convince China to stop buying... high prices are here to stay
Rio Says China Inflation Won't Undermine Commodities (Update1)
By Jesse Riseborough
June 16 (Bloomberg) -- Rio Tinto Group, the world's third- largest mining company, said recent gains in inflation in China driven by rising food and energy costs won't undermine strong demand for commodities.
``A leveling out in food and energy prices will lead to falling 'headline' inflation without a dramatic impact on economic growth,'' Tom Albanese, chief executive officer of London-based Rio, said in a slides presentation sent today to the Australian stock exchange. ``Any sustained inflation is likely to support aluminum and iron ore prices.''
Inflation in China, the world's fastest growing economy and biggest consumer of commodities, slowed to 7.7 percent in May, from 8.5 percent in April, still exceeding the government's annual target of 4.8 percent, according to the statistics bureau. Demand from China has spurred six straight years of commodity gains, including record prices for iron ore and copper.
Prices for Rio's products ``are supported by economic fundamentals, not financial bubbles,'' Albanese said, citing dwindling supplies of metals including copper. ``Current prices of key Rio Tinto products are justified by the economic fundamentals of sustained demand growth and tight supply; together these factors will support long-run prices.''
Rio, battling a $164 billion takeover offer from the world's largest mining company BHP Billiton Ltd., rose A$4.62, or 3.6 percent, to A$134.50 on June 13 on the Australian exchange.
To contact the reporters on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net;
Last Updated: June 15, 2008 19:39 EDT
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