China seen going for mining JVs after Rio debacle

China, bruised by the collapse of a proposal to buy a Rio Tinto stake, could confine itself to project-level deals with miners to feed its hunger for metals and shun company acquisitions to avoid further loss of face.

State-owned metals group Chinalco was pinning its hopes on a $19.5 billion tie-up with Rio Tinto, which would have guaranteed it metal supply, but that deal failed as shareholders disapproved and rising metal prices allowed Rio to raise money by a rights issue.

China has a pressing need for raw materials, particularly iron ore and copper, to fuel the leap in construction from the government's infrastructure-heavy $586 billion stimulus package.

But its experience with Rio could lead to a different approach: buy stakes in mines rather doing company-level deals.

"I think it's very unlikely that Chinese companies are going to go for hostile takeovers or anything like that. Also, I don't think they want to run these companies now. What they want is the product, that's the key thing," said Tim Williams, director of global mining & metals at Ernst & Young.

"They'd want to keep the existing management in place; don't rock the boat, but do a deal, structure some sort of arrangement. They haven't got the experience of running modern mines, so they need the existing management, and they don't want to upset anybody," he said.

Since the start of 2009, copper has soared by over 94 percent, nickel is up more than 60 percent, and aluminum up more than 27 percent, on hopes of a Chinese recovery.

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.