Chinas Zijin Bids For Indophil

China’s Zijin Bids For Indophil

Zijin Mining Group Co., China’s largest gold producer and third-largest copper producer, announced Tuesday that it would pay 545 million Australian dollars (500 million U.S. dollars) to take over Indophil, an Australian gold and copper company.
The Fujian-based Zijin Mining would make a conditional cash off-market takeover bid for all of the issued shares in Indophil for 1.28 Australian dollars per share, according to a statement on the company website.
Indophil Resources NL, with its registered office in Victoria, Australia, owns 34 percent operating interest in Sagittarius Mines, Inc., a Philippine mineral exploration and development company which controls the world-class Tampakan Copper-Gold Project in the Southern Philippines.
The Tampakan Project’s mineral resource is the largest undeveloped copper-gold deposit in Southeast Asia. The latest confirmed mineral resource estimate is 2.4 billion tonnes containing 13.5 million tonnes of copper and 15.8 million ounces of gold at a 0.3 percent copper cut-off grade, the company said in the statement.
The deal, reached on Sunday, is still waiting for regulatory approval from both the Chinese and Australian governments, the company said.
Zijin Mining surged 6 percent to 10.6 yuan (1.56 U.S. dollars) as of 11 a.m. Tuesday.

Bottler refutes tainted claim

Bottler refutes tainted claim


A Beijing supermarket displays on Sunday bottles of the Nongfu Orchard 30% Mixed Fruit and Vegetable Juice, which Haikou city officials claimed contain arsenic. [China Daily]
Nongfu Spring Co yesterday refuted the claim by Haikou city officials that two of its beverages were contaminated with the toxic chemical arsenic, and complained about the way local officials have handled the entire episode.
At a press briefing in Hangzhou, capital of Zhejiang province yesterday, Nongfu officials showed the results of tests done by the National Food Quality Supervision and Inspection Center (NFQSIC) that showed its products – Shuirong C100 in Grapefruit flavor (a water-soluble vitamin C beverage) and Nongfu Orchard 30% Mixed Fruit and Vegetable Juice – had below the accepted level of 0.2 mg of arsenic per liter.
“All of our products are definitely free of the poisonous chemical arsenic we’re going to make a claim for compensation from the local government,” said Zhong Shanshan, chairman of Nongfu Spring, without elaborating on how much compensation the company will demand.
Haikou’s Industrial &Commercial Administration Bureau posted a warning announcement to consumers on Nov 24 that Nongfu Spring’s Nongfu Orchard and Shuirong C100 manufactured by the company’s Guangdong Wanluhu Co Ltd on June 27 and Aug 16, respectively, along with a soft beverage product made by Taiwan-based Uni-President Group, contained excess amounts of arsenic.
Officials from the bureau could not be reached by China Daily yesterday, but a spokesman surnamed Gao from the Haikou bureau’s superior counterpart – the Industrial &Commercial Administration Bureau of Hainan province – said that officials have already sent the products to NFQSIC for re-testing upon Nongfu Spring’s objection to the result made by the Haikou bureau.
“We’re still waiting for the outcome from the top inspection organization,” Gao said.
Officials from the other implicated firm, Uni-President Group, said the Haikou bureau sent the re-inspection request to the top counterpart on Nov 28.

Wugang to pay $400m for stake in MMX

Wugang to pay $400m for stake in MMX


A ship laden with iron ore making its way into the industrial port of Wugang. The Chinese steelmaker will become the second-biggest shareholder in the Brazilian miner.[China Daily]
Steelmaker Wuhan Iron &Steel Group (Wugang) is acquiring a 21.52 percent stake in Brazilian iron ore miner MMX Mineracao e Metalicos SA for $400 million to bolster its iron ore supplies.
Rio de Janeiro-based MMX, controlled by Brazil’s richest man Eike Batista, will issue new shares at an equivalent price of $3.93 each, according to a regulatory filing.
Wugang has also agreed to build a 5-million-ton steel plant in Brazil with MMX’s parent EBX.
The Hubei-based steel maker will become the second-biggest shareholder in MMX and will also appoint two board members, according to a statement released yesterday.
“The stake buy will help Wugang secure iron ore supplies,” said Wugang President Deng Qilin at the signing ceremony.
Wugang spokesman Bai Fang said in a telephone interview yesterday that he could not release further details as deal still needs to get approval from both the Chinese and Brazilian governments. “We are hopeful of starting work on the new steel plant next year provided we get the necessary approvals,” he said.
China’s largest steel producer Baosteel and Brazilian mining giant Vale had earlier planned to build a steel mill in Brazil, but deferred the plan in March as global steel demand slumped and steel mills started cutting existing output.
If the deal gets approved, Wugang will become China’s first steelmaker to build a steel mill in Brazil.
MMX, which currently has the capacity to produce 10.8 million tons of iron ore a year from its Sudeste and Corumba mines, is expected to increase it iron ore capacity to 40 million tons by 2013.
“Chinese enterprises have been looking out for overseas buys to reduce the monopoly of the three giant miners Vale SA, Rio Tinto and BHP Billiton and counter their unreasonable pricing mechanism in iron ore talks,” said Bai.
“Mainland steelmakers would also seek other investment opportunities in countries like Canada, Brazil and Australia, and also look for new opportunities in emerging markets like Ukraine,” said Bai.
Earlier this month, Wugang got approval from the Australian government for a A$271 million ($249 million) investment in Centrex Metals Ltd, and also for a 60-percent stake in the iron ore rights of five Centrex projects in South Australia that could contain up to two billion tons of resources.
The Chinese steelmaker signed a long-term contract this month to buy iron ore from Venezuela’s Corp Venezolana de Guayana.
In June, Wugang finalized the terms of a $240-million investment agreement with Consolidated Thompson Iron Mines of Canada for a 19.99 percent stake.
The two companies will also establish a limited partnership in which Wugang will hold a 25 percent interest, and to which Consolidated Thompson will contribute its Bloom Lake property, a development-stage iron ore project with a 34-year mining life.

Wugang to pay $400m for stake in MMX

Wugang to pay $400m for stake in MMX

Steelmaker Wuhan Iron & Steel Group (Wugang) is acquiring a 21.52 percent stake in Brazilian iron ore miner MMX Mineracao e Metalicos SA for $400 million to bolster its iron ore supplies.
Rio de Janeiro-based MMX, controlled by Brazil’s richest man Eike Batista, will issue new shares at an equivalent price of $3.93 each, according to a regulatory filing.
Wugang has also agreed to build a 5-million-ton steel plant in Brazil with MMX’s parent EBX.
The Hubei-based steel maker will become the second-biggest shareholder in MMX and will also appoint two board members, according to a statement released yesterday.
“The stake buy will help Wugang secure iron ore supplies,” said Wugang President Deng Qilin at the signing ceremony.
Wugang spokesman Bai Fang said in a telephone interview yesterday that he could not release further details as deal still needs to get approval from both the Chinese and Brazilian governments. “We are hopeful of starting work on the new steel plant next year provided we get the necessary approvals,” he said.
China’s largest steel producer Baosteel and Brazilian mining giant Vale had earlier planned to build a steel mill in Brazil, but deferred the plan in March as global steel demand slumped and steel mills started cutting existing output.
If the deal gets approved, Wugang will become China’s first steelmaker to build a steel mill in Brazil.
MMX, which currently has the capacity to produce 10.8 million tons of iron ore a year from its Sudeste and Corumba mines, is expected to increase it iron ore capacity to 40 million tons by 2013.
“Chinese enterprises have been looking out for overseas buys to reduce the monopoly of the three giant miners Vale SA, Rio Tinto and BHP Billiton and counter their unreasonable pricing mechanism in iron ore talks,” said Bai.
“Mainland steelmakers would also seek other investment opportunities in countries like Canada, Brazil and Australia, and also look for new opportunities in emerging markets like Ukraine,” said Bai.
Earlier this month, Wugang got approval from the Australian government for a A$271 million ($249 million) investment in Centrex Metals Ltd, and also for a 60-percent stake in the iron ore rights of five Centrex projects in South Australia that could contain up to two billion tons of resources.
The Chinese steelmaker signed a long-term contract this month to buy iron ore from Venezuela’s Corp Venezolana de Guayana.
In June, Wugang finalized the terms of a $240-million investment agreement with Consolidated Thompson Iron Mines of Canada for a 19.99 percent stake.
The two companies will also establish a limited partnership in which Wugang will hold a 25 percent interest, and to which Consolidated Thompson will contribute its Bloom Lake property, a development-stage iron ore project with a 34-year mining life.

Yunnan Copper mulls Kazakh buy

Yunnan Copper mulls Kazakh buy


Domestic copper prices hit over 40,000 yuan per ton in April and stands at over 50,000 yuan per ton now. [Bloomberg news]
Yunnan Copper Co, China’s third-largest copper producer, is thinking of acquiring a copper mine in Kazakhstan next year, the company’s general manager Yang Chao told China Daily in an exclusive interview.
“The company is considering acquiring a considerable amount of shares of a local copper company,” Yang said without elaborating.
The company is also considering investing in Southeast and South Asian countries including Laos and Indonesia, Yang said.
Besides investment in the overseas market, the copper producer is also scouting for more copper reserves in the Inner Mongolia and Tibet autonomous regions.
The company said its copper reserves would touch nine million tons by 2012.
Yang predicted that copper prices might even surpass 70,000 yuan ($10,253.1)per ton in 2010, although prices are likely to remain volatile over the next year.
“Copper demand will increase next year,” Yang said.
Copper is widely used in home appliances, wires and cables; it can also be used in water pipes, largely increasing the need for copper in the future, according to Yang.
China’s stimulus package for the infrastructure sector also increases the need for raw materials such as copper.
Copper prices have been volatile over the past year. The global financial crisis caused domestic copper prices to drop to 22,000 yuan per ton at the end of last year from 50,000 yuan per ton in October 2008.
But domestic copper prices hit over 40,000 yuan per ton in April and stands at over 50,000 yuan per ton now. The weak dollar also helped copper prices to rally globally to a 14-month high last week.
Yunnan Copper’s profits plunged by 78.71 percent in the first three quarters this year due to weaker sales and volatile prices, while Jiangxi Copper, the largest copper producer in China, reported a 53 percent loss for the first three quarters.
Yang said the company’s profit for the whole year was likely to touch 600 million yuan.
Anticipating an increase in copper prices and a change of management at Yunnan Copper’s, analysts at First Capital Securities said they expect the company’s profits to double next year.
“Yunnan Copper’s current performance does not fully reflect the company’s profitability as its management team failed to capitalize on opportunities when they depleted inventory. They also failed to contract long-term orders when copper prices were favorable,” said Ju Guoxian, an industry analyst with First Capital Securities.
Deutsche Bank’s resources team is forecasting weaker copper prices in the first half of 2010 despite upgrading its long-term price outlook, largely due to expectations that China’s net copper imports could fall by about 30 percent.

Bottler refutes tainted claim

Bottler refutes tainted claim

Nongfu Spring Co. Monday refuted the claim by Haikou city officials that two of its beverages were contaminated with the toxic chemical arsenic, and complained about the way local officials have handled the entire episode.
At a press briefing in Hangzhou, capital of Zhejiang province Monday, Nongfu officials showed the results of tests done by the National Food Quality Supervision and Inspection Center (NFQSIC) that showed its products – Shuirong C100 in Grapefruit flavor (a water-soluble vitamin C beverage) and Nongfu Orchard 30% Mixed Fruit and Vegetable Juice – had below the accepted level of 0.2 mg of arsenic per liter.

“All of our products are definitely free of the poisonous chemical arsenic we’re going to make a claim for compensation from the local government,” said Zhong Shanshan, chairman of Nongfu Spring, without elaborating on how much compensation the company will demand.
Haikou’s Industrial &Commercial Administration Bureau posted a warning announcement to consumers on Nov 24 that Nongfu Spring’s Nongfu Orchard and Shuirong C100 manufactured by the company’s Guangdong Wanluhu Co Ltd on June 27 and Aug 16, respectively, along with a soft beverage product made by Taiwan-based Uni-President Group, contained excess amounts of arsenic.
Officials from the bureau could not be reached by China Daily yesterday, but a spokesman surnamed Gao from the Haikou bureau’s superior counterpart – the Industrial &Commercial Administration Bureau of Hainan province – said that officials have already sent the products to NFQSIC for re-testing upon Nongfu Spring’s objection to the result made by the Haikou bureau.
“We’re still waiting for the outcome from the top inspection organization,” Gao said.
Officials from the other implicated firm, Uni-President Group, said the Haikou bureau sent the re-inspection request to the top counterpart on Nov 28.

China Mobile fights porn criticism

China Mobile fights porn criticism

Cell phone giant China Mobile has frozen contracts with its mobile Internet partners in order to stem criticism that pornography was being sold through its network.
The move by the mobile phone company means it will not collect fees for its online partners, rendering paid services unavailable.
China Mobile’s music business unit has also temporarily ended cooperation with 256 Internet retailers.
“All service providers that have commissioned us to collect fees for their businesses online are required to guarantee that their services are free from porn and are not commercially related to any pornographic websites for mobile phones,” Wang Jianzhou, chief executive of China Mobile, said in a press release Monday.
Three major wireless carriers in China, including China Mobile – all State-owned – are coming under mounting pressure to eradicate access to pornography through mobile phones.
More than a dozen Chinese ministry-level government departments have launched a joint crackdown on pornography on mobile phones in recent months.
Mobile carriers were put under their scrutiny after complaints that websites available only to cell phone users were skirting government controls and providing easy access to pornography.
“The telecom operators collect fees from mobile services and these operators take most of the profits generated by porn content on the mobile sites,” Wang Song, an official with the multi-sector Office Against Pornographic and Illegal Publications, told Xinhua News Agency.
“So the operators should take responsibility (for cutting the links).”
However, most Internet regulatory bodies have no effective means of monitoring mobile sites, and the manual checks currently employed are slow, Wang said.
Many pornographic sites have taken advantage of this to flood sites with lewd material that would have been filtered if it had been on the broader Internet.
China’s three major wireless carriers, China Mobile, China Telecom and China Unicom, offer online services to about 192 million mobile phone users, more than half of the total number of Internet users in the country.
The China Internet Illegal Information Reporting Center said on Nov 24 that it is receiving a growing number of tip-offs about mobile pornography sites.
On Nov 16, the Office Against Pornographic and Illegal Publications announced a crackdown on the creation and distribution of lewd material, which focused on the cities of Shanghai, Beijing, and Guangzhou, as well as Zhejiang province, where many of the sites involved are registered.
It ordered local authorities to “clean up” such sites and shut down those with “serious violations”.
The office said the campaign was launched due to concerns over minors having access to pornography.
In a survey of 235 middle school students conducted by the office in Shanxi province, 74 percent had mobile phones and 60 percent had logged on to mobile sites.
Of the 199 senior high school student respondents, 83 percent knew that some sites had pornographic content.
“Children and adults alike can easily log on to such sites,” said Li Qiang, a doctor with the Chinese Academy of Sciences, who has initiated several reports against mobile Internet service providers over the issue.

Pfizer looks inland for less costly talent pool

Pfizer looks inland for less costly talent pool

Besieged by the ballooning cost of talent in China’s coastal regions, some multinational companies are traveling to untapped inland cities for equally skilled, but less expensive brainpower.
As the world’s largest pharmaceutical firm, Pfizer Inc has blazed a trail in moving westward with plans to set up a new research and development (R&D) center in Wuhan, Hubei province, in central China to support Pfizer’s global R&D projects.
The US-based drug maker signed a Memorandum of Understanding on Nov 25 with the local government to build the new operation at Wuhan National Bioindustry Base.
This makes Pfizer the first global pharmaceutical company to establish a presence in the area. The company did not disclose the amount of its investment in the project.
“Pfizer is setting up this R&D center in Wuhan primarily because of the city’s solid research foundation and rich pool of talent,” said Tan Lingshi, general manager of Pfizer (China) Research &Development Co, based in Shanghai.
R&D recruitment
Pfizer plans to recruit about 200 people for the new inland R&D center in the next three years, depending on operating conditions.
The pharmaceutical giant has more than 360 employees at its Shanghai R&D center that was set up in 2005.
“I was very impressed by the caliber of talent in the city, which is home to more than 1 million college students,” Tan said, adding that the city’s research foundation, including hospitals and research institutes, are very strong.
“The cost of skilled people is significantly lower than that in Shanghai. However, the quality of talent is almost the same in terms of English language and research skills,” Tan said. “It’s the major driver behind our presence in Wuhan.”
After Premier Wen Jiabao adopted the “Rise of Central Region” strategy in 2004 to promote development throughout central China, the inland region’s education systems and infrastructure for investment dramatically improved.
“The Wuhan center will be an integral part of Pfizer’s global R&D operations while being closely aligned with the Chinese government’s strategy on biopharmaceutical industry development in the region,” said Allan Gabor, regional president of Pfizer North Asia.
Since China’s reform and opening-up began, foreign attention has been focused on a small number of universities in the coastal region, said Calla Wiemer, a visiting scholar at the University of California’s Center for Chinese Studies in the United States.
“With so many Chinese young people now attending college, China can support excellence to a much greater degree within its university system,” Wiemer said.
Intel’s inland move
In addition to Pfizer, Intel Corp, the world’s largest semiconductor chip manufacturer, started moving some of its assembly and test facilities from Shanghai to the inland province of Sichuan beginning in February to trim costs in the midst of the global financial crisis.
Intel’s inland move will be completed in 12 months, the company said.
“The arrival of foreign firms will bring financial support to university research programs and generate job opportunities for well-trained graduates,” Wiemer said.
“This should also help to retain talent locally that would otherwise be drawn to coastal areas,” she added.
Pfizer is in discussions with Wuhan University about becoming partners in training initiatives.
Liu Chuantie, secretary-general of the Administrative Committee of the Wuhan East Lake Hi-Tech Development Zone, said that Pfizer’s presence in the region also will serve as a catalyst for the industry’s development in Wuhan and the surrounding midwestern regions of China.
According to Pfizer, the local government will offer the company tax and housing benefits, but the details of the subsidies still were being negotiated.
“Backed up by local authorities, the planned area of our new center probably will surpass our Shanghai center that covers 5,000 sq m,” Tan said.
Wiemer said there are challenges to moving operations inland in China.
“The major concern for companies like Pfizer moving to the inland regions is that intellectual property protection has to be guaranteed to make sure that its big investment in the area is financially successful,” Wiemer said.

Struggling Adidas sees long-term growth ahead

Struggling Adidas sees long-term growth ahead


An Adidas clerk studies a display at a new store in Beijing. The company is battling overly high inventory levels stemming from over-optimistic sales forecasts before the 2008 Olympic Games. [Bloomberg News]
Xiao Li, 23, a salesperson at an Adidas outlet in Chaoyang District, Beijing, is enjoying her new leisure time but worried about when the situation could change for the worse.
“Recently, a shoe inventory of 17 pairs needed at least two months to be sold, if we were lucky enough,” she said.
But she added there is little opportunity to offer discounts without the brand holder’s permission.
“They need to preserve the brand’s image and fame,” Xiao said.
“In China, the company continued to experience higher than usual inventory levels caused by over-optimistic sales forecasts made prior to the Beijing Olympic Games,” said Li Ling, public relations manager for Adidas China.
But the company is confident inventories will be back to normal levels by the end of the second quarter of 2010, she added.
Adidas suffered a record decline in global sales in the third quarter, with its Asian business sliding relentlessly as inventories remained high and retailers demonstrated a lack of confidence in the company’s products.
Sales decline
In the first nine months of 2009, sales for the Adidas Group in Asia decreased 9 percent, mainly as a result of declines in Japan and China, and only slightly better than the company’s 11 percent slump in sales in North America. The company declined to discuss the country-by-country financial figures for Asia.
“The forecasts in 2008 were a major factor. The loss of control of their franchises is another big problem for the company’s business management,” said Zhang Qing, CEO of Key Solution, a leading Chinese sports consulting firm in Beijing.
Since last year, the main retail agents of Adidas China have closed around 100 outlets nationwide. Belle Group, the biggest sales agent for Adidas China, closed about 50 Adidas outlets, while Daphne shut down 20 to 30 franchise shops.
“When faced with challenges, franchisers often act in their own interests. As a multinational company, Adidas relies heavily on big franchises, while domestic counterparts such as Li Ning and Anta always maintain tight control over their outlets,” Zhang added.
A management drain also had an effect on the sporting goods giant. During the second half of 2008, Zheng Jie, general manager of Reebok China, a division of Adidas Group, took the position of executive vice president of China’s well-known brand Anta.
A senior sales executive of Adidas China also jumped ship to Anta to take the role of sales director this year, according to China Business News.
Li said that, despite the gloomy situation, China continues to be a highly attractive, long-term market for Adidas Group.
“We see long term potential based on the increasing sports participation and style consciousness of consumers and also an expansion into lower-tier cities.” Li said.
“We expect franchise store numbers to increase. Meanwhile, retail remains an important part of our China strategy. In the years to come, we will further optimize and expand our portfolio of controlled space throughout China,” Li said.
During the third quarter of 2009, Adidas Group sales declined 7 percent to 2.89 billion euros (29.5 billion yuan) on a currency-neutral basis, creating a record of consecutive negative growth for the first three quarters. Gross profits decreased by 3.7 percent.
Revenues for the Adidas segment decreased 6 percent, while the Reebok segment decreased 12 percent against the previous year. Third-quarter revenues for the Taylor-Made Adidas golf segment decreased 12 percent on a currency-neutral basis.
“This was mainly due to the challenging macroeconomic environment and the non-recurrence of sales related to several new product launches in the prior year period,” wrote the company in its third quarter report.
Meanwhile, the company experienced a decrease in inventories of 8 percent and in net borrowing of 12 percent, compared with the previous year.
Herbert Hainer, global CEO of Adidas, admitted consumer and retailer sentiment still hovered between fear and optimism for the group, but said he was cautiously optimistic about the situation in 2010 in light of the forthcoming FIFA World Cup, tighter control of inventories, a better financial position and a leaner organization.
“World Cup events usually provide a great harvest for Adidas historically,” Zhang said.

Chinas Sinosteel taps Turkish market

China’s Sinosteel taps Turkish market

With competitive prices and improved quality, China’s steel giant Sinosteel Corporation is exploring the market potential in Turkey’s steel industry as an equipment provider and contractor.
The Sinosteel Equipment and Engineering Co., Ltd. (Sinosteel MECC), a subsidiary of Sinosteel, had completed construction of 16 steel-producing or related projects in Turkey in the past decade, with a contracted value of 200 million U.S. dollars, Pan Xiaoyong, Sinosteel MECC representative in Turkey told Xinhua.
The company had another 11 projects under way, with a total investment of 300 million U.S. dollars, said Pan.
Sinosteel MECC provided Turkish steel mills with mining and steel-producing equipment at prices considerably lower than those offered by western companies, which helped the company to win market opportunities, said Pan.
“Sometimes our prices are even as low as half of the western companies’ prices while our products also have sound quality, if not the best,” he said. “That gives us an advantage in the competition and we are improving our quality, too.”
Ahmet Taskim, who is in charge of the Toscelik slab casting and hot-continuous-rolling project contracted by Turkish steel producer Tosyali Holding to Sinosteel MECC in 2007, said he was satisfied with products and services provided by the Chinese partner and that he had started to discuss further cooperation with Sinosteel MECC.
“We not only reduced our investment cost through cooperating with Sino steel MECC but also saved a lot of time, so that we can launch the production just as the economy began to recover,” said Taskim.
Turkey’s steel industry has been hard hit by shrinking demands amid the recession, with the country’s crude steel output down 17.3 percent year-on-year to 11.8 million tons in the first half of this year, the London-based research company Business Monitor International said in a September report.
However, the industry was forecast to see a rapid recovery from2010 as there had been signs for a rebound, with the second-quarter crude steel output down 14.1 percent year-on-year but up 15 percent from the previous quarter to 6.29 million tons, according to the report.
Constructed in south Turkey’s Osmaniye Province with an estimated annual steel output of 1.1 million tons, the project was the biggest of its kind undertaken by a Chinese contractor overseas and would come into operation by the end of 2009, said Pan.
Steel products of the project would target Turkish and Middle Eastern markets and meet demands in city planning and natural gas transmission, said Taskim.
“It’s the first time I work together with the Chinese,” Arif Bolat, a technician at the Toscelik project, told Xinhua. “They have great initiative in work and we’ve built good partnership.”
Besides equipment imported from China, Sinosteel MECC also had more than 500 Chinese technicians and workers at the Toscelik project who were responsible for equipment installing, said Pan.
Sinosteel MECC entered the Turkish market in 1999 and most of its projects were located in Turkey’s Biga, Eregli, Iskenderun and Osmaniye.