The Chinese government apparently flush with cash and looking to spend it, has begun the process of investigating a potential bid on Rio Tinto, a world wide conglomerate that holds interests around the world including the Alcan aluminum operation in Kitimat.
With Rio Tinto apparently in play on the world markets, the Chinese government is linking up with Chinese steel companies to purchase the assets of the company, presently in play with a 120-billion dollar bid from BHP Billiton.
Should the Chinese choose to move ahead with their plans it will once again change the dynamic for the company and may have more impact on the shifting sands of modernization at Kitimat Works.
No one is certain for sure that if the Chinese are successful in their take over bid that they will keep the properties whole, divvy them up to different corporations, or sell off blocks of them to various buyers. But should they choose to operate the company and all of its assets worldwide that would make them the latest owners of the former Canadian business icon and give the Chinese government partial interest in another sector of British Columbia’s economy to work with.
However, the folks in Kitimat would probably be hoping that they were inclined to move faster on aluminum than they have been on pulp and paper.
The Globe and Mail had some background on the many, many levels of financial moves currently being examined by China.
China's Baosteel mulls Rio Tinto bid: report
December 4, 2007 at 1:54 AM EST
SHANGHAI — Top China steel maker Baosteel is weighing a bid to counter BHP Billiton's $120-billion (U.S.) takeover offer for Rio Tinto Group, Baosteel chairman Xu Lejiang told a Chinese business newspaper.
“We are considering [a bid]. The possibility of a takeover plan going ahead is very big,” he said in an interview with 21st Century Business Herald, adding that it was important for the firm to have its own mines.
Asked about the price of a possible deal, he said: “200 billion is probably not enough.”
A bid by Baosteel would challenge an all-share takeover proposal from BHP Billiton, whose chief executive has toured China, South Korea and Japan in an attempt to garner support from the region's steel makers.
“Rio's assets, particularly in iron ore, are very valuable and will attract interest from any number of interested parties,” said mining analyst James Wilson of DJ Carmichael & Co. in Perth. “Whether they can actually buy them is another story.”
Rio Tinto declined to comment on the report. A supervisor at Baosteel Group's publicity department said he was not aware of any talks that would link Baosteel with a bid for Rio Tinto.
Shares in Chinese steel makers rose on the report, with Baoshan Iron and Steel Co., a unit of Baosteel, up 5.15 per cent by midday. But Rio Tinto shares were down 2.59 per cent.
BHP Billiton has said it is confident its proposed merger will not be derailed by big customers such as China.
In response to steel makers' concerns that a merger would give the combined company too much clout on pricing, particularly in iron ore, BHP chief executive Marius Kloppers last week said the market, not BHP, would set prices and dismissed speculation that China might launch its own bid for Rio using its well-heeled sovereign funds.
Chinese industrial firms are scouring the outback in search of Australian mining companies willing to swap equity for cash to fund exploration and development. But none are on a scale of the sort that it would take to acquire Rio.
China's steel groups have so far kept investments in Australia largely to yet-to-start projects, such as Fortescue Metals Ltd.
Rio and BHP are the dominant iron ore miners in Australia's Pilbara region, the world's single largest deposit, shipping hundreds of millions of tonnes annually to steel mills in Japan, Korea and increasingly China.
Another report on Tuesday quoted an executive at steel firm Shougang as saying the government and major steel makers were studying a joint bid for Rio Tinto.
But the report, published by Bloomberg News, was denied by a Shougang executive, who said the report was incorrect.
“Shougang is not involved in, and will not be involved in, any joint bid for Rio Tinto Group,” Tan Yixin, general manager of China Shougang International Trade and Engineering Corp. Mineral Import and Export Co., told Reuters. “The company is not aware of any joint bid among steel makers in China for Rio Tinto Group.”
Asked about the reports, Qi Xiangdong, a deputy secretary general with the China Iron and Steel Association, told Reuters: “We do not know anything on the takeover plan.”