China still on the hunt...

[GRG55]

bill and a number of others that hang out here won't be surprised by this. Although this is a peanut sized deal for the Chinese, it's indicative of the thinking going on in the Hidden City [Verenex is controlled by Canadian headquartered energy trust Vermillion Energy]...

CNPC to bid for Verenex eyeing Libya asset -report

Sun Dec 14, 2008 8:41pm EST

HONG KONG, Dec 15 (Reuters) - China National Petroleum Corp (CNPC), the country'a largest oil company, is bidding for Canadian energy firm Verenex Energy (VNX.TO) to broaden its oil and gas assets in Africa, South China Morning Post reported on Monday, citing sources.

The deal may worth about $300 million, the newspaper said, adding a successful bid would broaden CNPC's assets in Africa as Verenex owns a 50 percent stake in part of Ghadames Basin in Libya...

[GRG55]

Re: China still on the hunt...

bill and a number of others that hang out here won't be surprised by this. Although this is a peanut sized deal for the Chinese, it's indicative of the thinking going on in the Hidden City [Verenex is controlled by Canadian headquartered energy trust Vermillion Energy]...

CNPC to bid for Verenex eyeing Libya asset -report

Sun Dec 14, 2008 8:41pm EST

HONG KONG, Dec 15 (Reuters) - China National Petroleum Corp (CNPC), the country'a largest oil company, is bidding for Canadian energy firm Verenex Energy (VNX.TO) to broaden its oil and gas assets in Africa, South China Morning Post reported on Monday, citing sources.

The deal may worth about $300 million, the newspaper said, adding a successful bid would broaden CNPC's assets in Africa as Verenex owns a 50 percent stake in part of Ghadames Basin in Libya...

More news this morning...

Tanganyika Jumps on Report of Sinopec Bid Approval

Dec. 15 (Bloomberg) -- Tanganyika Oil Co. Ltd., which pumps oil and gas in Syria and Egypt, advanced to the highest in a month in Stockholm trading after Caijing reported China Petrochemical Corp. has received state approval for a takeover.

Tanganyika increased 14 kronor, or 8.1 percent, to 186 kronor, the highest since Nov. 12, valuing the Vancouver, Canada-based company at 11.6 billion kronor ($1.4 billion).

Sinopec Group, as China Petroleum is known, was granted approvals from the State Council and the National Development and Reform Commission, Caijing said, citing unidentified people close to the transaction. Sinopec Group, parent of China Petroleum & Chemical Corp., in September offered to buy Tanganyika, valuing the company at about $1.8 billion then.

[The Outback Oracle]

Re: China still on the hunt...

So maybe the plot is that instead of buying US assets in the US which would be politically unacceptable to the US, China spends its trillions of USD buying up assets everywhere else.
'Everywhere else' then spends the dollars back in the US buying what they need. Problem solved...except
Does this fulfill EJ's recipe for inflation in the US?
The Western world gets very short of resources in the medium term.

There's this gorilla been standing in the corner of the room we have been pretending not to see......

[phirang]

Re: China still on the hunt...

I am anticipating more Chinese purchases of mining properties in Peru...

[metalman]

Re: China still on the hunt...

So maybe the plot is that instead of buying US assets in the US which would be politically unacceptable to the US, China spends its trillions of USD buying up assets everywhere else.
'Everywhere else' then spends the dollars back in the US buying what they need. Problem solved...except
Does this fulfill EJ's recipe for inflation in the US?
The Western world gets very short of resources in the medium term.

There's this gorilla been standing in the corner of the room we have been pretending not to see......

china doesn't have all the $$$. japan, uk, russia...

[The Outback Oracle]

Re: China still on the hunt...

Not to mention the ME...China sure seems to be very intent on gobbling up resources though.

[touchring]

Re: China still on the hunt...

so what should they do instead? gobble up madoff like funds, cdos?

[GRG55]

Re: China still on the hunt...

Not to mention the ME...China sure seems to be very intent on gobbling up resources though.

They're just doing an Oriental version of Buffett. Buying what everyone else is fearful of buying [and throwing away].

[The Outback Oracle]

Re: China still on the hunt...

Asians generally think a long way further ahead than we now do. My favourite anecdote is the Japanese pouring shiploads of Australiancoal into the water about 18 years ago, so that they would have a plentiful supply of cheap coal when it got expensive in the future.
Do I get the feeling we are all thinking it doesn't matter if the Chinese buy up a whole lot of resources because they are now plentiful and cheap?
And sure it is a good oppurtunity for them, all those USD reserves, and commodities cheap to buy.

[bill]

Re: China still on the hunt...

Asians generally think a long way further ahead than we now do. My favourite anecdote is the Japanese pouring shiploads of Australiancoal into the water about 18 years ago, so that they would have a plentiful supply of cheap coal when it got expensive in the future.
Do I get the feeling we are all thinking it doesn't matter if the Chinese buy up a whole lot of resources because they are now plentiful and cheap?
And sure it is a good oppurtunity for them, all those USD reserves, and commodities cheap to buy.

They may send cheap labor your way included in the purchase.
All she needs is a big whip.
http://www.bloomberg.com/apps/news?p...Ooc&refer=home
Australia’s Richest Woman Rinehart Seeks Chinese Mine Partners

By Andrew Hobbs, Jason Scott and Stephen Engle

Jan. 22 (Bloomberg) -- Australia’s richest woman, Gina Rinehart, has a team in China seeking partners to finance her second iron ore project and a coal mine, betting the Asian nation will succeed in engineering a recovery.

Rinehart, 54, daughter of the man who discovered the mines that made Australia the world’s biggest iron ore exporter, expects to sign partners for both projects this year. She also wants labor laws changed to allow hiring of lower-cost overseas workers to help develop projects to increase the nation’s mineral exports.
Guest Laborers
Developing that kind of infrastructure would be easier in Australia if the government relaxed regulations that bar companies from employing overseas workers at less than Australian minimum wages, Rinehart said.

[GRG55]

Re: China still on the hunt...

They may send cheap labor your way included in the purchase.
All she needs is a big whip.
http://www.bloomberg.com/apps/news?p...Ooc&refer=home
Australia’s Richest Woman Rinehart Seeks Chinese Mine Partners

Rinehart, 54, daughter of the man who discovered the mines that made Australia the world’s biggest iron ore exporter, expects to sign partners for both projects this year. She also wants labor laws changed to allow hiring of lower-cost overseas workers to help develop projects to increase the nation’s mineral exports.

Guest Laborers
Developing that kind of infrastructure would be easier in Australia if the government relaxed regulations that bar companies from employing overseas workers at less than Australian minimum wages, Rinehart said.

bill: I can see cheap Chinese labour continuing to stream into places such as sub-Saharan Africa, as resources are developed using Chinese money, engineering, equipment and people.

But Australia? With a "Labour" government? Unless there is a real shortage of labour in Australia [hard to imagine if the entire globe is going into a recession/depression and unemployment rates are rising in every developed economy, including Oz], I have difficulty seeing how Rudd's government could manage the politics of hordes of guest workers at below the minimum wage.

Be interesting to see what folks like the Oracle who live there think.

[BadJuju]

Re: China still on the hunt...

bill: I can see cheap Chinese labour continuing to stream into places such as sub-Saharan Africa, as resources are developed using Chinese money, engineering, equipment and people.

But Australia? With a "Labour" government? Unless there is a real shortage of labour in Australia [hard to imagine if the entire globe is going into a recession/depression and unemployment rates are rising in every developed economy, including Oz], I have difficulty seeing how Rudd's government could manage the politics of hordes of guest workers at below the minimum wage.

Be interesting to see what folks like the Oracle who live there think.

A friend of mine was decrying the fact that Australia has sold most of its natural resources to foreign nations. With China on the hunt for natural resources, I would not be surprised if this actually occurred. China has to export its population as well, so it seems likely that it could occur.

[GRG55]

Re: China still on the hunt...

bill and a number of others that hang out here won't be surprised by this. Although this is a peanut sized deal for the Chinese, it's indicative of the thinking going on in the Hidden City [Verenex is controlled by Canadian headquartered energy trust Vermillion Energy]...

CNPC to bid for Verenex eyeing Libya asset -report

Sun Dec 14, 2008 8:41pm EST

HONG KONG, Dec 15 (Reuters) - China National Petroleum Corp (CNPC), the country'a largest oil company, is bidding for Canadian energy firm Verenex Energy (VNX.TO) to broaden its oil and gas assets in Africa, South China Morning Post reported on Monday, citing sources.

The deal may worth about $300 million, the newspaper said, adding a successful bid would broaden CNPC's assets in Africa as Verenex owns a 50 percent stake in part of Ghadames Basin in Libya...

And here it is...

CNPC buying Verenex to scoop up Libyan oil assets
Thu Feb 26, 2009 11:34am EST

CALGARY, Alberta, Feb 26 (Reuters) - China National Petroleum Corp launched a friendly C$443 million ($357 million) offer for Verenex Energy Inc (VNX.TO) on Thursday to give the state-owned oil company a stake in a promising Libyan oil concession...

...Under the deal, CNPC's international arm will offer C$10 in cash for each share of Verenex, representing a 28 percent premium to Wednesday's closing price. The company's stock sold for C$10.52 a year ago.

With the assumption of debt, the deal is worth C$499 million, the companies said.

Vermilion Energy Trust (VET_u.TO), which owns 45 percent of Verenex, has agreed to tender its shares to the offer. Units of Vermilion jumped C$1.43, or 6 percent, to C$24.06 in Toronto.

The deal is contingent on consent from the Libyan National Oil Corp, with which the company has an exploration and production sharing agreement...

...Verenex is operator of Area 47 and has a 50 percent stake in the production sharing agreement in the first five years of exploration. That interest drops to 25 percent for any commercial developments in a subsequent 25-year production period.

Late last year, Verenex said an independent assessment of gross contingent oil and gas resources identified as much as 2.15 billion barrels.

It last announced a discovery in Area 47, its 10th, in January. The well flowed at a test rate of 1,315 barrels of oil and 16.2 million cubic feet of gas a day.

CNPC's interest in acquiring the stake follows a C$2.1 billion takeover of Canada's Tanganyika Oil Co by another Chinese oil producer, Sinopec, last year. That secured heavy oil producing assets in Syria.

China's big state-owned energy companies have spent years hunting for deals to satisfy growing oil demand back home, scooping up assets in Africa, the Middle East, South America and Canada...

[Slimprofits]

Re: China still on the hunt...

We posted a bunch of deals to this one too. No need for two threads. Here is a list:

• China to Loan Petrobras $10B
• $25 billions for Russian oil deal
• much smaller amounts but also loans to Jamaica, Angola and Fiji in the last couple of weeks.
• China Minmetals confirms $1.7 bln offer to buy OZ Minerals
• 18% stake in Rio Tinto for $20B

[KGW]

Re: China still on the hunt...

From "Resource Investor" (sorry, the table formatting is botched. see the original article.)

The Chinese Wizards Seek Out Technology Metals In The Land of Oz

By Jack Lifton
18 Feb 2009 at 10:42 AM GMT-05:00

China's bid for Rio Tinto could be a game changing development, and it's only the beginning.

China has recently become very active in seeking out what at first impression look to be resources of just “base metals” in developed countries such as Australia and Canada and by aggressively buying into or enlarging existing positions in one of the world’s largest mining conglomerates, London and Melbourne based Rio Tinto plc (RTP: (ADR) NYSE).

I have been trying to sound an alarm for years about the critically short supply of technology metals, almost all of which are byproducts of base metal mining, or the mining of relatively abundant metals; even if some of them, such as titanium, are not as easily produced as the classical base metals.

China is benefitting in two very important ways by the recent and ongoing acquisitions and substantial investments undertaken by several of her largest state-owned companies.

First of all China gets supplies of base metals, including iron ore, copper, lead, zinc and aluminum, the structural metals of our civilization. China’s appetite for those metals for its own domestic consumption is voracious. The current global recession just gives cash-rich China breathing space and a once-in-a-lifetime opportunity to acquire, at bargain prices, the resources necessary for its infrastructure. As I have written here before, it would take the Chinese steel industry, at its present output of 450,000,000 tons per year, more than 20 years to catch up with the per capita amount of steel enjoyed by today’s American population in the form of infrastructure, such as bridges, buildings, reinforced concrete, appliances, railroad tracks and rolling stock, ships and private vehicles.

To see the second, and I think, “intended consequence” of China’s current bargain shopping look at the following table the first version of which appeared in my Sept. 16, 2008, Resource Investor article, “The Age of Technology Metals:”

Byproduct Critical Technology Metals For Thin Film Photovoltaic Solar Cell (PVSC) Manufacturing

Metal Source Metal

1. Germanium, Indium Zinc

Cadmium

2. Selenium, Tellurium Copper, Lead

Byproduct Critical Technology Metals for Electronic and Nuclear Uses:

1. Gallium Aluminum

2. Hafnium Titanium, Tin, Rare Earths

3. Zirconium Titanium, Tin, Rare earths

4. Thorium Rare Earths, Uranium

Byproduct Critical Technology Metals for Specialty Steel Alloys:

1. Molybdenum Copper

2. Rhenium Molybdenum

Byproduct Critical Technology Metals for environmental uses:

1. Rhodium Platinum

The word “critical” above denotes the fact that there are no practical substitutes for the metals in their uses. In fact, typically the use itself would not be possible without the specific technology metal or substituting it would so seriously degrade the performance of the technology as to make it impractical.

The most important thing to remember about byproduct minor metals is that the tail doesn’t wag the dog. Unless the primary metal is produced in large volume, there is no production of the byproduct. So for gallium, for example, which up until now is only known as a trace (5 parts per million on average) in bauxite, the primary ore of aluminum, its production is limited to around 200 tonnes per year at this point, simply because that is the amount that can be recovered from 39 million tonnes of aluminum, last year’s production (2008).

Chinese bargain hunters have a covert agenda. They are accumulating ownership of not only base-metal mines and mining conglomerates, but also by default the sources of critical technology metals, many of which are already a Chinese production monopoly through primary production and recycling.

China has discovered to its dismay that buying minerals in the ground in places like infrastructure-less central Africa requires a very long very expensive infrastructure investment before any real value can be recovered. Chinese businessmen have now discovered why western businessmen avoided these capital-intensive projects. They had no reasonable expectation of a return on investment in any period during which metals and minerals prices might be stable or rising.

Nonetheless, China has continued investing in Africa because China takes a very long-term view and is willing to accept the risks of political instability, especially where it has a good chance of influencing the form of a future government.

China however needs metals and minerals now as well as in the future, so it has turned its attention to the developed economies and in particular to the struggling mining companies that have been hit by the financial crisis and poor metal prices.

China gets an additional value from these western-based struggling mining companies that its African acquisitions don’t have: The latest mining and refining technologies developed by centuries of European, American and Australian mining engineers and metallurgists. In addition, these working mines come with their resources and reserves already proven, their infrastructure and utilities constructed and their workforces trained and professional.

All the Chinese companies need to do is finance operations, then ship concentrates or even refined metals to a nearby modern port and load them on cheap Chinese flagged transport to China. It’s the greatest deal in human history. China gets to trade the hard currencies it was paid for its cheap labor in return for all the natural resources and technologies through which it can bypass between one and four generations to become the world’s premier producer of high-tech items within the first 25 years of the 21st century.

Note for example that in just the last few months:

1. Chinalco, China’s state-owned aluminum company, has made an offer to increase its 9% holding in the London and Melbourne based Rio Tinto Group to 18% through a mix of outright purchase of certain mining assets and convertible debentures, giving it the right to shares rather than money repayment. The Rio Tinto assets that most interest Chinalco are its deposits of the ores of iron, copper and aluminum and their associated byproducts.

2. China Minmetals, a state-owned mining, metallurgical, construction and investment (in mining related industries) company, has made a well received and almost certain to be accepted bid to buy Australia’s struggling Oz Minerals. Oz is the world’s second largest zinc producer, and also produces copper and lead through an expensive merger it made just last year, which because of the world commodity recession literally destroyed the company’s ability to finance continuing operations. Minmetals will also get all of the byproduct technology metals associated with the zinc, lead and copper produced.

In summary please note that in return for cash provided from the nation’s reserves by the central bank, as part of a long-range strategic plan to become self sufficient in metals and minerals, including all of the technology metals, state-owned companies in the mining sector in China are getting for bargain prices:



1. Structural metal ore sources and refined metals including iron, copper, aluminum, lead, and zinc, and are getting for free

2. The latest and best mining and refining technology the west has to offer, and

3. A supply of the technology metals as well as their extraction and refining technologies.

As the wizard of Oz said to Dorothy when his masquerade was exposed: In Oz everything isn’t as it seems to be. In Chinese mining outsourcing, as in Oz (minerals), everything isn’t as it seems to be. The real bargain that the Chinese are getting is a chance at mastery of the global economy through outright gifts of priceless resources.



Jack Lifton is a featured contributor to the new Resource Investor. With 35 years experience in the OEM electronics and automotive supply industries, he is today a metals sourcing consultant for OEM heavy industry and offers due diligence analysis for institutional investors. Lifton is a prominent speaker on the market fundamentals of minor metals and their end-uses and travels the world on behalf of Fortune 500 and Global 1000 corporations. Reach him directly at JackLifton@aol.com.