Word: rio
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...mean the government is looking for a face-saving way out of the situation. Far from it, in fact. The case - just as many outsiders had assumed - is rooted in what one Chinese steel-industry official called the "sense of outrage at the highest levels in Beijing" that Rio walked away in June from a $19.5 billion tie-up it had struck late last year with Chinalco, the Chinese state-owned aluminum company. To make matters worse, from Beijing's perspective, Rio then turned around and agreed to a joint venture in iron ore with global rival BHP Billiton. Together...
...China's response is three-pronged. First, the case against Hu and his Rio colleagues, which Vice Commerce Minister Fu Ziying earlier this week insisted will show foreign investors that China is "ruled by law now," will proceed. And while the industry insiders interviewed by TIME do not have detailed knowledge of the specific charges likely to be brought against the Rio executives, they describe the steel and mining businesses - in China as well as other developing countries - as industries in which "side deals" involving key principles like executives and government officials are common. Despite Walsh's assertion that there...
...China's second tack is to prolong negotiations over the contract price of iron ore with the two main suppliers, hoping to wear them down while frantically moving to line up other potential sources beyond Rio and BHP Billiton for next year and beyond. China is the world's largest steel producer, and despite the global recession, its factories are running close to flat-out thanks to enormous infrastructure construction and brisk sales for new autos and apartments. That means it would appear to have little leverage in pursuit of the price cuts on iron ore that it seeks...
...there are different kinds of leverage. In June, when Rio and BHP Billiton announced their intention to form a joint venture, a Ministry of Commerce spokesman in Beijing said the proposal had "the obvious color of monopoly." China implemented a new antitrust law last year and has already used it once to block a high-profile foreign acquisition in China - Coca-Cola's planned buyout of juicemaker Huiyuan. The fact that the proposed Rio-BHP Billiton deal doesn't involve a Chinese firm is irrelevant. China's antitrust regulators have the same right to review the plans of two global...
...Earlier this summer, many mining-industry analysts were skeptical that China would actually act against the proposed Rio-BHP tie-up. They assumed the Ministry of Commerce was just venting after the Chinalco deal failed. But a banking source with close ties to the Australian mining industry says that perception is wrong. "The antitrust review is real, and right now if I had to bet, I'd bet that [the Rio-BHP Billiton iron-ore tie-up] doesn't happen. The Chinese are going to block...