| China slams Chinalco rejection | |
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| Jul 9, 2009 19:54 |   |
 | By China correspondent Stephen McDonell Posted Wed Jun 10, 2009 6:26am AEST Updated Wed Jun 10, 2009 10:01am AEST Increasingly strong criticism is coming from Australia's second-largest trading partner China to the merger of BHP Billiton and Rio Tinto and the subsequent rejection of a major Chinese investment. According to Beijing, the rejection of Chinalco's investment in Rio Tinto has "caused strong reactions" not only from China's iron and steel industry but also the general public in China. The Government comments followed a strongly worded attack from the Chinese Iron and Steel Association. Western Australian Premier Colin Barnett has the busy job of bridge building. He will be travelling to China next month to try and reassure investors there that his state is still open for Chinese investment. When Rio Tinto rejected a major investment from China's Chinalco late last week, in one sense, it let the Australian Government off the hook. It meant there would be no need for a decision as to whether this bid by a Chinese Government company to buy up a large chunk of a key mineral resource was in Australia's interests or not. But now a new headache has emerged for Rudd Government. That is how to smooth things over with a China that is clearly not happy with this result. If there was any doubt about this, it disappeared last night when Government spokesman Qin Gang explained Beijing's feelings on the matter at the Foreign Ministry press conference. "Chinalco and Rio Tinto had reached a cooperative agreement which had injected the vigour of economic cooperation between China and Australia," he said. |
| Jul 9, 2009 19:55 | #1 |
| He went on to say "the purpose and principle were mutually beneficial". "Now the decision made by Rio Tinto, I believe, has not only very much disappointed the related Chinese company but has caused strong reactions from the iron and steel industry and also the general public in China." He did not elaborate on what these strong reactions would mean for the general public. The ABC asked him specifically what the Government thought about the merging of BHP Billiton and Rio Tinto operations. "I have nothing to say about the commercial cooperation between these two companies," he said. "But we do hope that the market price of international minerals remains stable and that the mineral resources market can be fully open." The General Secretary of the China Iron and Steel Association, Shan Shanghua, was not beating around the bush about the BHP Rio deal. "The merger of Rio Tinto and BHP has a strong colour of monopoly," he said. "The Chinese iron and steel enterprises strongly oppose it." For China the bottom line is the price of iron ore. If it has to start paying more than it thinks is fair then this merger will be blamed again and again. Either way, if China and Australia were in a relationship, they would not be holding hands in public at the moment. |
| Jul 10, 2009 08:44 | #2 |
| Imagine that. China, the world's leader in copyright infringement, the worlds leader in pirated goods, the worlds leader in the outright theft of commercial and intellectual property, arresting Mr. Hu and his partners for "stealing state secrets". What a joke! |
| Jul 10, 2009 19:26 | #3 |
| in 2007, this australian co. stocks almost plunged to death. with the help of chinese funding in stock market with the conditions of chinese hold 30% of its stake, it came back to life soon with the fair market value doubling even tripling. after that, it tore up the agreement with the fines that is just tiny part of huge tangible and intangible benefits they got from china at that time. what's more, this australian co violates the agreed sales credit terms with 40% discounts threatening that they can get more bids from Japan and other countries... We chinese are not and will not the meat on the chopping board as we used to be... the austrilian co. four sales liason offices shut down with part of personnel is detained with the prosecution of business spies...tearing down the bridge after going over it is a big taboo in business...Let' wait and see how Chinese try the next step! |
| Jul 10, 2009 22:46 | #4 |
| Yes MARRIE , and I am sure there will be a lot more of this type of conflict(s) with other foreign corporations and China as time goes on. But one thing is certain....China right now is the 800 lb. gorilla. |
| Jul 11, 2009 01:24 | #5 |
| Marie...Your statement is totally wrong. You should check your facts before posting such nonsense. "in 2007, this australian co. stocks almost plunged to death. with the help of chinese funding in stock market with the conditions of chinese hold 30% of its stake, it came back to life soon with the fair market value doubling even tripling. after that, it tore up the agreement with the fines that is just tiny part of huge tangible and intangible benefits they got from china at that time. what's more, this australian co violates the agreed sales credit terms with 40% discounts threatening that they can get more bids from Japan and other countries..." 1.Rio Tinto was NEVER in danger of collapsing. China NEVER funded Rio Tinto! Rio bought Alcoa and overextended but was NEVER in danger of collapse. Rio needed to raise capital to fund it's Alcoa purchase and had several options. 2.In 2007 Chinalco held a 9% stake in RIO and wanted to lift it to 18%. NEVER 30%! Tht's ridiculous! The Australian government does not allow more than 20% holding in any strategic company so how could Chinalco get 30% ???????? 3. Chinalco offered a ludicrously low price for an aditional 9% stake which was initially accepted by the Rio board but later rejected by shareholders as being oportunistic and way below fair value. Unlike in China, shareholders actually have a few rights in Australia and can veto a board decision. A capital raising was undertaken instead which was hugely successful and oversubscribed. 4 There is no agreement for a 40% price reduction. The previous price agreement expired on June 30.China refuses to reach ANY agreement and insists on a 40% reduction.This has been rejected by ALL iron ore supply companies from EVERYWHERE in the entire world!. Not just Rio Tinto! Japan, South Korea and India have agreed to the 33% discount but China refuses. China has now arrested the RIO executive and charged him with espionage. He was imprisoned for 6 days withour legal representaion or consular contact and now risks life imprisonment. They have also accused him of bribing steel company officials. He is virtually assured of being convicted because the Chinese secret police are involved. They have now confiscated Rio Tintos computer files and gained access to economically sensitive information. Private information! Who would have thought that corruption existed in China. Don't tell me that bribery isn't rife in all facets of Chinese business! What a joke! They have singled out this man for simply doing his job and accused him of stealing state secrets. China is attempting to bully and intimidate international companies using local laws which are totally unjust. The charges are simply a pay back for China losing face. China now risks doing serious damage to its international standing and credibility. The entire world is watching this fiasco. Next time check your facts Marrie! |
| Jul 11, 2009 02:39 | #6 |
| Marrie.."tore up the agreement with the fines that is just tiny part of huge tangible and intangible benefits they got from china at that time" Would you call US$195 million "just tiny part"? I wouldn't! That's the break fee that Rio paid Chinalco.US$195 million. I repeat. Rio got NOTHING whatsoever from China! NOTHING more than an offer from Chinalco to buy an extra 9% at a huge discount! " it came back to life soon with the fair market value doubling even tripling". In fact Rio shares traded at A$30 just prior to the Chinalco offer. They traded last Friday at $46. Definately not "doubling even tripling". Just a 50% increase which is inline with other resource companies during the same period. "detained with the prosecution of business spies". Not business spies Marrie. Real SPIES! They have been accused of stealing state secrets! A crime punishible by DEATH in China! Isn't it strange how China feels aggrieved by the Rio executive gaining sensitive information but allows it's secret police full access to Rio Tintos private computer files. It smacks of hypocrisy to me. |
| Jul 11, 2009 13:29 | #7 |
| I have no reasons to disagree with Gary and Bobert. Commercial benefits are interrelated national interests. National security is one of the reasons that TINTO rejects the request that China seeks more ownership of Rio Tinto. However, the Chinese did save TINTO from danger by continuing purchasing from TINTO and stimulating TINTO share price up by realsing the good news that the Chinese would ask for more stake thru injecting more liquidity during the most difficult times, which contribute priceless efforts to Tinto's financial performance. So I should not say that it is unreasonable that detention of the four employees and crackdown of corruption in huge deals that could happened during credit crisis. M. |
| Jul 11, 2009 16:23 | #8 |
| Yeah right marrie. Give an international company executive life imprisonment or execute him for simply doing his job. Great idea! China will make a lot of friends that way. He never stole state secrets.It was business! "National security is one of the reasons that TINTO rejects the request that China seeks more ownership of Rio Tinto." Nothing to do with national security marrie. We just don't want to sell or entire country to predators! At worst the Rio executive paid bribes to corrupt official which is what EVERBODY does in China. China lost face because it couldn't buy a larger stake in Rio and this was the payback. It couldn't buy that larger stake because the shareholders of Rio Tinto rejected the offer. You act as if China was Rio Tintos saviour. You act as if China was trying to do something philanthropic. What crap! China never saved Rio Tinto from anything. It never contributed ONE SINGLE DOLLAR to Rio Tinto! It tried to buy a stake in Rio when it was dirt cheap. NOTHING MORE! It was entirely a self interested and selfish offer. It made US$195 million on the deal. If that is a saviour then I'm glad I'm atheist. |
| Jul 11, 2009 17:41 | #9 |
| Some more terrifying reading for any international businessmen in China: http://www.theaustralian.news.com.au/ http://www.theage.com.au/ |
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