China's War for Ore

The Wall Street Journal ^ | July 15, 2009 | Holman W. Jenkins Jr.

[myknowledge]

Business is being reshaped around the world.

China was miffed by the outcome of what we last year called the corporate "deal of the century." But shareholder interests prevailed. How often will that be said in the future?

Politics, that ugly dynamic when mixed with business, was already back in play last week as Rio Tinto, an Australian mining giant at the heart of the controversy, saw four of its Chinese executives arrested in Shanghai on spying charges.

China says the busts are not retribution for the cancelled deal between Rio and a state-owned company, which received angry press in China. Instead, the arrests supposedly arise from skullduggery by Rio officials during fraught annual ore-price negotiations with mainland steelmakers. But the distinction may be irrelevant. Ore has become a major neuralgic concern for China. It sees its dependence on imported supply as strategically risky. It fears that its massive attempts to "stimulate" domestic job growth are being drained off as fatter profits for Australian mining companies.

[myknowledge]

The Chicoms are signing more and more 'corporate deals' to embark on its Keynesian economic spending spree out of the created global recession.

[ReadTheLaw]

The more China interferes with free enterprise, the more China will be regarded as too unsafe to deal with. They will be shunned like lepers.

[4rcane]

china has the money in reserve, while US does not, so US has to borrow or print. While China’s stimulus will be inefficient, it wont be as damaging

[bruinbirdman]

"More disturbing, China has upped its ore purchases in recent weeks even as mainland growth seems to be slowing, suggesting an effort to lay in a stockpile for a longer showdown against Rio-BHP."

Iron ore to ChiComs up $8 to $90/ton. Rio Tinto is happy.

yitbos