You could very well be right regarding the Chinese Factor. Also, i wouldn't discount them using FMG as a vehicle for further acquisitions and JV's. Its more like BHP/RIO versus FMG (With the Chinese influence).
Overall, i see it as a good thing and should heat up the competition. Ha! Ha! Noticed a poster on the FMS thread yesterday even reckons they will go to $5. LOL!!!
Bungy we know that someone has been capping us for a fair while. Eventually something will give. Considering we are supposed to be going into production 2010, still hasn't dismissed the Rail Spur to FMG, i just wonder where we are really at. All i see atm is further great drill results with plenty more to come and no indication of where we are heading, especially to production end of 2010. IMO, that's why there has been so much speculation, a lack of clarity.
Posted 5 hours 2 minutes ago Updated 4 hours 33 minutes ago An iron ore train is loaded in the Pilbara region
The deal saves Rio from drowning in debt and it makes iron ore production easier and cheaper for BHP. (AAP: Rio Tinto/Christian Sprogoe, file photo)
* Audio: Rio tie up with BHP an opportunity for small miners (AM) * Related Story: Rudd reassures Chinalco over failed merger
Australia's China Business Council says Beijing may hold the Federal Government responsible for Rio Tinto's decision to back out of a deal with Chinalco.
The Chinese Government-owned miner had wanted to invest more than $24.3 billion in Rio Tinto.
Yesterday Rio Tinto walked away from the Chinalco deal and overnight Prime Minister Kevin Rudd met with Chinalco telling them it was a commercial decision.
Mr Rudd says he made it clear that Australia welcomes foreign investment.
But the council's Duncan Caulder has told Saturday AM that Beijing may lay some of the blame for the deal's collapse on the Government.
"When the deal was struck with Chinalco we were in worse economic times than perhaps we are now," he said.
"There have been some recovering in prices in Rio Tinto's share price so that has allowed time for an alternative deal to be put together."
Mr Calder regularly meets with Chinese officials to discuss investment in Australia and says his job may have just got harder.
"Beijing may have some disincentive views and some disappointment with the Australian Government over the delays in the FIRB [Foreign Investment Review Board] approval process, which may be seen to have allowed this deal to have collapsed," he said.
New deal
Instead of selling stock to Chinalco, Rio will ask its existing shareholders to buy $19 billion worth of shares.
It will also join its lucrative iron ore business with long-time Pilbara rival BHP Billiton.
The deal saves Rio from drowning in debt and it makes iron ore production easier and cheaper for BHP.
Mr Calder says the Australian-based iron ore miners have the whip hand over China.
"This may increase the combined marketing power of the entities and increase Chinese concerns that they may face another round of iron-ore price increases in the future," he said.
Those on the negotiating frontline are hoping China will now see the value in Australia's other mineral companies.
George Jones heads up iron ore explorer Gindalbie Metals and has been doing deals with China for decades.
He thinks Australia's small resource projects stand to benefit.
"China would be bemused and disappointed with what's happened," he said.
He says he thinks it will encourage China to invest more in developing stranded and small iron ore deposits.
"Not only small ones, I mean there's a lot of big ones that are not developed yet, and I would... I believe that China would ... encourage them to get a move on with the development of these other assets," he said.
"I think it's quite positive for the industry outside the majors."
Cheers markco2
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