Chinalco Invests $20 Billion in Rio Tinto

123jump.com Staff
12 Feb, 2009
New York City

China coal exports fall 36.3% to 3.66 million tons in January. China approves stimulus package for shipbuilding industry. Chinalco agrees to invest $20 billion in Rio Tinto. Chinalco agreed to a $13 billion asset sale and $7 billion convertible note issue with Rio Tinto today.

[R]6:00AM New York, 6:00PM Hong Kong - China coal exports fall 36.3% to 3.66 million tons in January. China approves stimulus package for shipbuilding industry. Chinalco agrees to invest $20 billion in Rio Tinto.[/R]

Market Sentiment

In Hong Kong trading Hang Seng Index fell 2.3% or 310.91 to 13,228.30, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, dropped 3.1% or 232.01 to 7,367.56. In Shanghai trading CSI 300 index lost 0.6% or 12.80 to 2,318.34.

Daily turnover on main-board edged lower to HK$39.6 billion from HK$39.9 billion yesterday.

Coal Exports Fell 36.3% to 3.66 million tons in January

China’s General Administration of Customs reported today that the country’s coal exports fell 36.3% in January, but the export value increased 19.3% to $482 million on rising prices of coal exports.

Average coal export prices per ton edged up 87.5% to $131.8.

Also total exports and imports of coal in 2008 fell 14.6% to 45.43 million tons and declined 20.8% to 40.4 million tons, respectively.

From August last year, China imposed a 10% export tariff on energy products such as soft coal and coking coal.

China Approves Stimulus Package for Shipbuilding Industry

China’s State Council reported yesterday that it has approved a stimulus package for the shipbuilding industry to stave off mounting economic pressures.

Government will encourage banks to lend more to the industry and assist in relevant technological upgrades that are needed to improve competitiveness.

China’s Association of National Shipbuilding Industry forecasts that new orders for domestic shipbuilders will drop to 20 million to 30 million deadweight tons in 2009 from 58.18 million deadweight tons a year ago.

Gainers & Losers

Hong Kong stock indexes fell as investors doubted the effectiveness of the $789 billion compromise stimulus plan.

Investors were also worried by comments made by U.S. Treasurer Timothy Geithner that he is still working out details of the financial rescue plan.

Next Media gained 27.6% to HK$1.11 after Hong Kong Economic Journal reported today that the company’s chairman Jimmy Lai might purchase a cable TV station in Taiwan.

China Mobile dropped 2.6%.

Energy stocks declined after crude oil prices fell $1.6 to $35.9 per barrel. PetroChina tumbled 3.4% to HK$6.18, CNOOC fell 2.3% and Sinopec Corp declined 3.4%.

Aluminum Corp of China shed 4.8% after its parent Chinalco said it has agreed on a $20 billion deal with Rio Tinto, through which the former will help the Australian miner in its asset sale deal.

China Mengniu Dairy tumbled 3.2%.

Rio Tinto to Sign $13 billion Asset Sale Deal with Chinalco

Chinese miner Chinalco today agreed to a US$13 billion asset sale and $7 billion convertible note issue with Rio Tinto today.

Chinalco board has since approved the $20 billion deal, which will see the company shoring up its stake in the Australian mining firm from 9% to between 18% and 19% through the note issue.

Also, the company will take stakes of between 10% and 40% across assets such as iron ore and alumina/bauxite in Australia and the Escondida copper mine in Chile that is run by BHP.