Wednesday, November 14, 2007

BHP's Rio proposal could spark copycat deals (BHP, RTP)

Here's a roundup of China/BHP-RTP stories. The first one is from ChinaKnowledge:

Although no deal has not been inked yet, BHP Billiton Ltd's offer for Rio Tinto Group has shaken up the global mining and raw materials sectors, with speculations that a wave of similar M&As is waiting to happen.

Those who have expressed interest in acquisitions in Australia and Mongolia, among other places, include China Shenhua Energy Co.<601088><1088> and Yunnan Copper Co<000878>, both China's top producers of coal and copper respectively. Shenhua's shares fell by 1.8% to close at HK$43.30, while Yunnan Copper dropped by 7% to close at HK$58.79 on Nov. 13....MORE

From the Sydney Morning Herald:
China's steel industry too fragmented to save Rio from BHP

CHINA'S fragmented steel industry is approaching a consensus that it can do nothing to stop BHP Billiton from swallowing Rio Tinto.

The world's investment bankers are swarming through Beijing, hawking every imaginable mining and petroleum deal permutation to China's state-owned corporate giants. But the steelmakers themselves say they can only stand back and hope the proposal falls over....MORE

From the International Herald Tribune:
Chinese mining companies wary of BHP-Rio Tinto deal
BHP Billiton's offer for Rio Tinto Group - potentially the largest mining acquisition in history - is spurring Chinese mining companies to step up global takeovers to secure raw materials.

China Shenhua Energy, the country's largest coal producer, and Yunnan Copper Industry, its third-largest copper producer, are planning acquisitions in Australia, Mongolia and elsewhere, executives said....MORE

From the Herald-Sun (Australia):
China on edge over BHP Billiton-Rio Tinto merger

CHINA'S biggest aluminium producer and a senior government official have added their voices to a growing chorus of Chinese concern about the proposed merger of BHP Billiton and Rio Tinto.

The concerns have fuelled speculation that Chinese interests will try to intervene in the proposed $400 billion tie-up of the two giant miners.

Aluminium Corp of China -- also known as Chalco -- yesterday expressed worries that a combined BHP and Rio would concentrate raw material supplies and wield too much pricing power.

"Someone told me that if they combine copper ore and iron ore, prices may double next year," Chalco president Luo Jianchuan told Bloomberg.

"It makes us worried."...MORE

From The Age:
China bank not behind Rio Tinto purchase

State policy lender China Development Bank on Wednesday denied reports that it is involved in the purchase of a stake in mining company Rio Tinto.

"There's no matter like this," Yang Hua, a spokeswoman at the Chinese policy bank said.

The German daily newspaper Handelsblatt wrote in an advance copy of Wednesday's issue, citing unnamed sources at the Chinese bank, that China Development Bank was preparing the purchase of a stake in Rio Tinto on behalf of an unnamed Chinese company....MORE

From the Financial Times:
Rio Tinto/BHP tie-up a concern to Chinese steel industry; Baosteel and Sinosteel seen interested in mandatory iron ore disposals

The potential tie-up between mining majors BHP Billiton and Rio Tinto would be problematic to China’s bargaining power for the supply and price of iron ore, a source familiar with China’s State Council told mergermarket.

The source said that the potential deal between BHP and Rio Tinto would be ”no good to China”, whose rapid infrastructure growth is highly dependant on iron ore for steel production. The source explained that the deal would lead to the world’s natural resource distribution being dominated.

He added that Chinese companies cannot influence the merger except by proposing a rival bid. On this front, the source said that the China Investment Company (CIC) and China Development Bank (CDB) are possible potential counter bidders for Rio Tinto.

He said the China Investment Company was designed to make equity investments in overseas countries and the most suitable targets are resources companies. He added that if either player decided to send a rival bid, approval from the China State Council would be required....MORE