02 JUNE 2011www.ctv.ca
Rio Tinto makes peace with Chinalco
Edited by : AL CIRCLE
2 min read
Mining giant Rio Tinto PLC is renewing its vows with a once-spurned Chinese partner by signing a mineral-exploration joint venture with state-owned aluminum producer Aluminum Corp. of China Ltd. (Chinalco).
The new entity will focus on mineral exploration in China, with copper as its “immediate priority,” the partners said Wednesday. Coal and potash will follow.
China is the world’s largest consumer of copper, an industrial staple, and is constantly hunting for more to meet its need for rapid infrastructure growth. Chinese demand for copper has helped propel the metal’s price to record levels in recent months of more than $4 (U.S.) a pound.
The country is anxious to find more copper reserves at home. Chinese firms, despite their deep pockets, balked recently at paying rich premiums to buy a couple of Canadian-based producers.
China’s Minmetals Resources Ltd. made a $6.3-billion hostile bid for copper producer Equinox Minerals Ltd. in April, but refused to enter a bidding war after Barrick Gold Corp. topped the price by $1-billion.
Last month, Chinese mining firm Jinchuan Group Ltd., backed by sovereign wealth fund China Investment Corp., failed to strike an acceptable deal for assets owned by copper-focused Lundin Mining Corp., according to sources. Jinchuan was among a handful of buyers that examined Lundin’s properties across Europe and Africa, but the Chinese miner’s interest has yet to result in a sale.
Wednesday’s official agreement between Rio Tinto and Chinalco complements the Chinese firm’s strategy to diversify its business away from aluminum and into other commodities, particularly since China is the world’s largest consumer of many commodities.
The new entity will focus on mineral exploration in China, with copper as its “immediate priority,” the partners said Wednesday. Coal and potash will follow.
China is the world’s largest consumer of copper, an industrial staple, and is constantly hunting for more to meet its need for rapid infrastructure growth. Chinese demand for copper has helped propel the metal’s price to record levels in recent months of more than $4 (U.S.) a pound.
The country is anxious to find more copper reserves at home. Chinese firms, despite their deep pockets, balked recently at paying rich premiums to buy a couple of Canadian-based producers.
China’s Minmetals Resources Ltd. made a $6.3-billion hostile bid for copper producer Equinox Minerals Ltd. in April, but refused to enter a bidding war after Barrick Gold Corp. topped the price by $1-billion.
Last month, Chinese mining firm Jinchuan Group Ltd., backed by sovereign wealth fund China Investment Corp., failed to strike an acceptable deal for assets owned by copper-focused Lundin Mining Corp., according to sources. Jinchuan was among a handful of buyers that examined Lundin’s properties across Europe and Africa, but the Chinese miner’s interest has yet to result in a sale.
Wednesday’s official agreement between Rio Tinto and Chinalco complements the Chinese firm’s strategy to diversify its business away from aluminum and into other commodities, particularly since China is the world’s largest consumer of many commodities.
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