China's mixed feelings over mining marriage

Publications: The Australian
Date: Nov 12, 2007

The Chinese finance, minerals and steel industries are split over BHP Billiton's audacious takeover bid for Rio Tinto.

Melbourne-based Robin Chambers, who has represented Chinese resource investors in Australia since the Channar joint venture with Rio in 1984, said in an industry conference speech in Perth earlier this year: "The need to secure access to overseas raw materials to support China's economic growth rate of 10 percent or more per year, is a key stra­tegic driving force."

Mr Chambers said in his speech that BHP and Rio "appear to have adopted a policy of not introducing the Chinese steel mills into new joint venture"

"They have been keen to retain 100 percent of the profits, and offer only long - term sales contracts with the Chinese mills."

"This has frustrated the Chinese, which have been under pressure from their government to go out and do more projects to secure long - term supplies of iron ore."

"And, of course, as with the Channar joint venture, to share in the massive profits which apply."

Australia last years provided China about 38 per cent of its imported ore, Rio supplying slightly more than BHP, with 23 per cent coming from Brazil, via its mining giant CVRD, which will attempt next month to set a benchmark ore prices from the eighth consecutive season - this time in negotiation of leading steel mill Baosteel - provides about 34 per cent.





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