Tag Archives: Kevin Rudd

No Progress In Rio 4 Case

Kevin Rudd, Australia’s prime minister, seems to have to no change out of his Chinese counterpart Wen Jiabao when the two discussed the case of Stern Hu and three of his Rio Tinto colleagues who were detained by Chinese authorities in July on suspicion of stealing state secrets. Speaking on the sidelines of the ASEAN meeting in Thailand, Rudd said only that the case, which has strained relations between Canberra and Beijing, continued to be the subject of “intense and continuing discussion” between the two countries’ foreign ministries. Deciphering the diplomatic body language, those discussions aren’t making much progress. The four were  formally arrested in August on charges of stealing commercial secrets, but not on the more serious one of stealing state secrets.

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China May Want To Buy Into BHP Billiton

Reports from Australia ahead of that country’s prime minister’s visit to Beijing that China wants to elbow its way into the takeover by BHP Billiton, the world’s largest mining company, of its rival Rio Tinto.

In February, it acquired a 9.3% stake in Rio for $14 billion through state-owned Chinalco. Wanting to secure raw materials for its steel industry, Chinese officials have been concerned that BHP’s $135 billion bid for Rio would lead to the merged group having too much power in negotiating prices. The price of iron ore has jumped fivefold since 2001, while coal prices are more than twice last year’s levels.

Baosteel has repeatedly been touted as a BHP bidder, but it would be a financial stretch even for China’s leading steelmaker. Just a 9% stake in BHP could cost upwards of $20 billion.

A consortium bid, if one is to materialize, seems more likely. And a consequential minority stake is more likely than an outright bid. Offshore investors must gain Australia’s Foreign Investment Review Board approval to buy more than 15% of a local company. Entities judged to be backed by Sovereign Wealth Funds cannot buy any shares without FIRB approval.

There are plenty of other deals for Prime Minister Kevin Rudd to talk about during his visit, too: Sinosteel Corp last month offered A$954 million for iron ore miner Midwest Corp, while China Metallurgical Corp has agreed to pay $300 million to buy a Cape Lambert Iron Ore Ltd project. Shougang, China’s fourth-largest steelmaker, already holds an 8.4% stake in Australasian Resources Ltd, which is developing an iron ore mine in Australia, all of which is making some Australians call for tighter regulation of foreign investment in the country’s natural resources.

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