China-Africa: China still on the hunt in Africa
Johannesburg - China will intensify its efforts to obtain resources assets in Africa after the failure of its attempt to gain a stake in Rio Tinto’s iron-ore and copper mines.
Martyn Davies, one of the country’s foremost experts on Chinese relations, says certain officials in the Chinese government will be seriously disappointed and frustrated about the partnership announced between BHP Billiton and Rio Tinto on Friday.
This has spiked the plans of Chinalco, China largest aluminium producer, to acquire a $19.5bn interest in Rio Tinto.
“The government will probably interpret this as a political decision against the Chinese acquiring overseas assets,” Davies commented over the weekend from Beijing, which he is visiting.
He reckons certain Anglo American assets would be particularly attractive to China.
The deal between Billiton and Rio will help Rio’s massive debt problem, but at the same time will impede outsiders’ access to the Pilbara region, the world’s richest iron-ore field that is the closest to China.
Chinalco would have acquired 15% of Hamersley Iron, Rio’s iron-ore company in the Pilbara. Hamersley and Robe River, Rio’s second iron-ore producer in the Pilbara, will now merge, forming a 320m ton/year producer in the already concentrated iron-ore market.
The extensions that can be developed thanks to the partnership will boost iron-ore production by the Pilbara region to more than 350m tons.
Billiton has seven iron-ore mines in Pilbara and Rio eleven. At least two ore bodies currently belonging to Rio can be developed owing to the partnership because their ore can now be delivered to a port using a Billiton rail line.
Brazil’s Vale will then be the second largest producer, with an output of some 220m tons/year. The shipping costs for Vale’s ore from South America will however make it virtually impossible for the Brazilian company to beat the two Australians on the threshold of China’s numerous steel mills once the steel market recovers from its current slump.
Kumba, Anglo’s iron-ore subsidiary that manages Sishen in the Northern Cape, is next on the list, yet far behind.
Kumba currently produces just less than 40m tons/year. Kumba is, however, doing extremely well owing to the quality of its lump ore.
- Sake24.com
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