China acts on merging of miners

THE Chinese Government is beefing up its team of international advisers amid the frenzy of consolidation sweeping the global mining industry.

Officials in Beijing have appointed the global corporate advisory arm of the investment firm Blackstone to provide advice on the wave of mergers taking place across the sector, and on the pricing negotiations taking place between Chinese firms and the world's major commodities producers.

The involvement of Blackstone is a logical move, since just under 10 per cent of it is owned by China Investment Corporation (CIC), the country's $200 billion sovereign wealth fund. Blackstone has already advised China Development Bank, a state-owned commercial bank, on its minority investment in Britain's Barclays, which it acquired last year.

Blackstone has been asked to jointly advise Chinalco, the state-owned aluminium company, on its role in BHP Billiton's $US171 billion ($180 billion) takeover bid for Rio Tinto, a deal that if completed would create the world's biggest mining company and rank as the world's second-biggest takeover.

Chinalco snapped up 9 per cent of Rio in January, and is considering whether to increase its stake to pressure BHP to strike a deal over raw material supplies. China is the world's biggest importer of iron ore as it attempts to satisfy its ravenous appetite for the raw materials required to fuel its economic growth.

Lehman Brothers, the investment bank, co-ordinated the dawn raid and is continuing to advise Chinalco.

This week Paul Skinner, the chairman of Rio Tinto, will hold talks with Chinalco executives during a Royal Ballet tour of the Far East which the mining group is sponsoring.

Chinalco, along with US aluminium giant Alcoa, bought a 12 per cent stake in Rio's London-listed business this year in raid that caught the miner by surprise. Although it was initially seen as a blocking ploy in the face of BHP Billiton's hostile takeover, Chinalco is now in talks with Rio over possible joint investments.

Rio is looking at spending more than $US1 billion to boost production at its aluminium operations in Australia by expanding its Weipa mines.

Dick Evans, head of Rio's aluminium operations, said recently: "We're moving along very independently with our feasibility work and valuations, but we're very aware that somewhere along the line there could be a co-operative play with Chinalco, depending on what their interests are."

Mr Evans said Rio's potential partnerships with Chinalco could include the joint development of assets close to Weipa, where Chinalco has bauxite reserves, although co-operation on use of proposed new port facilities is more likely.

Copyright and Exemption Declaration :¢ÙAll articles, pictures and videos that are marked with "China Aluminum Network" on this website are copyright and belong to China Aluminium Network (www.alu.com.cn). When transshipment, any media, website or individual must list the source from "China Aluminium Network (www.alu.com.cn)". We seek legal actions against anyone that disobey this. ¢ÚArticles that marked as copy from others are for transferring more information to readers, do not represent or endorse their opinions or accuracy and reliability. When other media, website or individuals copy from our website, must keep the source. Anyone that changes the articles' sources will hold the responsibilities for copyright and law problems. We also seek legal actions against anyone that disobey this. ¢ÛIf any articles copied by our website concern the copyright and other problems, please contact us within one week.