| Author |
 Topic  |
|
|
Ardent Listener
Administrator
USA
4841 Posts |
 Posted - 01/25/2008 : 21:05:41
|
Rio's Albanese Says Strong Iron Ore Market to Stay (Update2)
By Xiao Yu
Jan. 25 (Bloomberg) -- Rio Tinto Group, fending off a $114 billion hostile offer from rival mining company BHP Billiton Ltd., said an ``extremely strong'' iron ore market will last, and there's no slowdown in Chinese demand for commodities.
``We still continue to see a strong market in China for all that we sell, and we don't see any signs of that changing,'' Chief Executive Officer Tom Albanese said in an interview in Beijing today. He also reiterated Rio's rejection of BHP's previous three-for-one stock bid.
China's economy expanded more than 11 percent for the fourth straight quarter, supporting global growth and demand for iron ore, copper and aluminum as a recession looms in the U.S. Albanese is visiting China as iron ore producers are in talks with steelmakers to settle annual contract prices, which may rise 70 percent, Credit Suisse Group said this month.
``In our view, if there was a possible recession in the U.S. it will only have about 1 percent impact on Chinese GDP,'' Albanese said after visiting Chinese clients and officials. ``We continue to see strong market conditions and prices.''
Rio rose 171 pence, or 3.8 percent, to 4,690 pence in London at 10:52 a.m. local time. The U.K. benchmark FTSE 100 Index rose 0.9 percent.
Rejects BHP
BHP's Chief Executive Officer Marius Kloppers met Chinese steelmakers in November to seek their backing for a bid that would create a company controlling a third of global iron-ore trade, curbing the bargaining power of Chinese mills.
Albanese is pushing a growth plan that could treble production of iron ore, used in steelmaking, to more than 600 million metric tons a year to fight off Melbourne-based BHP's unsolicited offer. He also plans to raise dividends by 30 percent and sell as much as $30 billion of assets.
BHP, the world's largest mining company, has until Feb. 6 to make a formal proposal, after an earlier bid in November was rejected, according to the U.K. Takeover Panel. London-based Rio is the world's third-largest mining company.
``We said that the three-for-one proposal by BHP Billiton was nowhere near the value we see in Rio,'' Albanese said today. ``We are as comfortable saying that now, as I was comfortable saying that then.''
Cash Sales
To benefit from rising demand for iron ore, Rio plans to triple sales in the cash market, where the price is double annual contract prices. It may exercise a clause in contracts with steelmakers allowing it to sell only 90 percent of previously- agreed volume of iron ore at fixed annual prices, the company said Jan. 17.
``In this very strong steel and iron ore market, and as we continue to expand our iron ore business, we intend to increase the amount of iron ore that we would sell to spot, in addition to maintaining a strong position in benchmark markets,'' Albanese said today.
The plan to cut contracted supply is opposed by Chinese steelmakers, the largest buyers of iron ore, the China Iron and Steel Association said Jan. 18.
``For 2008, we are planning to increase our sales of iron ore on spot within the terms of our contractual relationship,'' Albanese said. Rio doesn't plan to stop selling iron ore by long- term contracts, he said.
Rio's China sales accounted for 16 percent of total revenue in 2006, according to Albanese. He expects the proportion to have grown last year, and to gain again this year.
To contact the reporter for this story: Xiao Yu in Beijing at yxiao@bloomberg.net
Last Updated: January 25, 2008 06:12 EST
You must be logged in to see this link.
|
Realcent.forumco.com disclosure. Please read.
All posts either by the members, moderators, and the administration of http://realcent.forumco.com are for your edification and amusement only. It is not the intent of realcent.forumco.com or its host to provide investment, medical, matrimonial, legal, security or tax advice and nothing posted here should be considered to be so. All rights reserved.
Think positive. |
|
|
Know Common Cents
Penny Pincher Member
195 Posts |
Posted - 01/25/2008 : 22:33:54
|
The Chinese as well as other countries with massive US $ foreign reserves have already begun their shopping spree. This is somewhat of a stealth way for them to divest themselves of dollar-based reserves instead of selling large amounts into the ForEx over a short period of time. Not only with commodities, but look at the foreign involvement (and bail out) of such (former) bellweather financials such as Citi Corp and others.
As the US buck becomes less desirable to others throughout the world, those who hold billions/trillions will continue to swallow up large office buildings, manufacturers, mining companies and just about everything else. This is something akin to playing Monopoly with your Brother. He has houses or hotels on almost all of the properties and you only have $112 left. Makes you hate to even pick up the dice for your next turn. The US populus will soon wake up and realize how much the ownership of nealy everything has changed while they were in hibernation. There are even foreign companies now owning US toll roads such as the Indiana Turnpike (I believe). Should we fault the Chinese for doing what they're doing? Wouldn't we be doing that if the situation was reversed? How about an introspective look into how we got ourselves into this spiral rather than shifting the blame to others? I'd like to believe that there's a valuable lesson for us here, but most have their own agenda. Unfortunate. Most unfortunate. |
Here in Wisconsin, we have some of the highest property and gasoline taxes in the US. We're squeezed so much, I have to make my daughter wear penny boxes for shoes. At least she has an endless supply. |
 |
|
| |
Topic |
|
|
|
"Strong Iron Ore Market to Stay."
Forum Locked
