Word: deale
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...investor, who spoke to TIME on condition of anonymity, says it's "up to Rio to convince us that this does not transfer key pricing power over a key commodity to a big customer. They need to make that case or I'm not inclined to vote for the deal" when it comes up for approval...
...already owns 9% of Rio, a share of some of the mining firm's most valuable mines. The remainder of the cash injection will go into bonds that can eventually be converted into an equity stake, which would double Chinalco's overall ownership position in Rio. The $19.5 billion deal amounts to the largest foreign investment any company in China has ever made. Two days ago, another state-owned firm, China Minmetals, said it would pay $1.7 billion in cash for Oz Minerals ltd., the world's second largest zinc miner...
...Chinalco, a huge consumer of iron ore, the deal provides potential pricing power over Rio, one of the world's three largest ore producers. Every year, steel and aluminum producers worldwide negotiate with miners over new contracts. For the past few years the mining companies have driven up prices relentlessly. Shan Shanghua, executive secretary of China's Iron and Steel Association, recently hinted that Chinese buyers will have some additional clout at the bargaining table...
...Metals analysts in London say rival giant BHP Billiton, which dropped a takeover bid for Rio last year as metals prices collapsed, is now poking around to see if other Rio assets may be for sale. In effect, the Chinalco deal has placed a value on some of the company's most attractive mines, including a Chilean copper mine that BHP already owns a piece...
...paid a premium for the Rio assets, given how much prices have slumped. But BOC International's Xu notes, "that the price is much, much lower for the assets - particularly iron ore and copper - than it would have been just six months ago. This seems like a pretty good deal for Chinalco...