Canadas Athabasca to sell oilsand stake to PetroChina

Canada’s Athabasca to sell oilsand stake to PetroChina

Canada’s Athabasca Oil Sands Corp announced on Monday that it plans to sell a 60-percent working interest in its two oilsand projects to PetroChina, a Chinese energy giant.
PetroChina will pay 1.9 billion Canadian dollars (1.7 billion U.S. dollars) for the MacKay River and Dover oilsand projects. The agreements also provide for certain financing arrangements for Athabasca.
The projects are located in the center of Athabasca region in northeastern Alberta, an oil-rich province in western Canada. The company says they contain approximately five billion barrels of bitumen, which can be refined into conventional oil.
“Oilsands projects are very capital-intensive long-term investments and difficult to fully finance in the traditional equity market,” Athabasca Chairman Bill Gallacher said in a press release.
“These strategic joint venture arrangements with PetroChina, one of the world’s largest energy companies, can ensure that the MacKay River and Dover projects will be developed in (a) timely manner, which is excellent news for Alberta and the rest of Canada,” Gallacher added.
Athabasca is focused on the sustainable development of oilsand resources in northern Alberta with net working interest in over 1.3 million acres.

Mercedes-Benz goes to top of class

Mercedes-Benz goes to top of class

German car maker Mercedes-Benz (China) Ltd officially began the domestic sales of its new generation of S-Class luxury sedans in Beijing on Friday.
The company is counting on the iconic model to keep its leading position in the luxury car segment and continue its success in China.
The full array of the new S-Class luxury sedans, the ninth generation, includes nine models with engine capacities ranging from 3.0 liters to 6.0 liters and will sell for between 930,000 yuan ($136,144 U.S. dollars) and 2.59 million yuan in China.
In order to meet the growing demand for energy-saving and eco-friendly vehicles, the new S-Class family has also added the S400 Hybrid, the world’s first series-production vehicle to feature a hybrid drive with a lithium-ion battery.
“Currently, China has become the largest S-Class market in the world, and the flagship model continued to reign in the top luxury segment with 7,300 units delivered to Chinese customers in the past seven months,” said Klaus Maier, president and chief executive officer of Mercedes-Benz (China) Ltd.
“With such success, we are confident that the new generation models will extend the S-Class leadership position, and attract even more of China’s top-echelon customers.”
As the flagship model of Mercedes-Benz, the S-Class is designed to set the benchmark in the luxury saloon segment. Worldwide sales of the legendary models reached 3.3 million units for the previous generations.
The product line-up made a great contribution to Mercedes-Benz’s overall sales in China and became strategically important for the German car maker to reinforce a leading position in the world’s fastest-growing market.
Maier said the S-Class’s market share in the top luxury car market came to 44 percent for the first seven months, leading against rivals the BMW 7 Series and the Audi A8.
“The S-Class is so popular because the Mercedes-Benz brand is the most recognized nameplate in China’s top luxury vehicle segment, whose customers are most brand-sensitive,” said Lang Xuehong, director of the automotive division from auto consulting research and consulting firm Sinotrust.
Mercedes-Benz said its vehicle sales on China’s mainland posted a 49 percent increase for the first seven months of this year, totaling 31,711 cars.
Sales growth in July reached 45 percent.
Industry analysts said the remarkable sales increase was a result of its low comparable bases a year earlier. But the diverse product strategy also works effectively to catch with the current market leader in China, Audi.
Despite the global financial crisis depressing demand in other markets, Mercedes-Benz expected the growing momentum in China would continue in the second half of this year given the positive economic growth and low market penetration of the premier cars, said Bjoern Hauber, general manager of sales and marketing of Mercedes-Benz (China).
Mercedes-Benz has introduced about 10 new models, such as the B-Class, the new E-Class and the Smart, in China so far this year. Some entry-level models expand its customer base with appeals to younger consumers.
In the upcoming months, Mercedes-Benz also plans to launch more than 10 new models as it remained upbeat about China’s luxury car market, Maier told Shanghai Daily.

GM China, Chinas FAW launch joint venture

GM China, China’s FAW launch joint venture

General Motors China and state-owned automaker FAW Group Corp. launched a 2 billion yuan ($293 million) joint venture Sunday to make light-duty trucks and vans, initially for the fast-growing Chinese market.

GM said the joint venture will use two existing factories affiliated with FAW and have a capacity of over 100,000 vehicles. That is expected to double by the end of 2010, GM China Group President Kevin Wale told reporters in a conference call.
Plans call for building a new assembly plant in Harbin, he said.
China is a key growth market for GM, which is expanding here despite its difficulties in the US market.
“Light trucks and vans have a significant role in China and other parts of the world,” Wale said. “Adding trucks rounds out our vehicle portfolio in China. It’s really a key focus for future growth.”
The 50-50 joint venture, based in the northeastern Chinese city of Changchun, where FAW is also based, will make FAW-branded vehicles for the Chinese market, GM said in a statement. The venture might make GM-branded vehicles for export later, but the focus for now is on meeting demand in China, Wale said.

Production will be at the existing factories in southwestern China’s Yunnan province, a facility owned by FAW-affiliate Hongta Yunnan Automobile Manufacturing Co. Ltd., and at Harbin Light Vehicle Co. Ltd. in the northeastern city of Harbin, GM said.
It said the two companies will conduct research and development, exports and after-sales support as well as vehicle production.
“Our new joint venture combines the expertise of two industry leaders in a partnership that benefits both,” Nick Reilly, GM executive vice president, said in a statement.
“It will address demand in China and other markets for high-quality, affordable products in one of the industry’s most robust segments, while complementing the portfolio of products that GM and FAW currently offer,” Reilly said.
Discussions on the venture began in early 2007 and it obtained regulatory approval in July, GM said.
FAW, originally known as First Auto Works, was founded in 1953 and began production in 1956. It sold 1.53 million vehicles, including sedans, vans and trucks, in 2008.
GM’s sales in China jumped 38 percent in the first half of this year, helped by strong demand for its minivans and other small vehicles. The automaker sold more than 100,000 vehicles a month in China from January to June for a total of 814,442, a record for any half year, the company said. That compares with sales of 1,094,561 GM vehicles in China for all of 2008.
Adding truck production will help expand the company’s exposure in one of the few major markets that continues to grow.
“These are quite different customers and quite different products,” Wale said.
He said he expected GM’s commercial vehicle sales to reach 80,000 to 90,000 this year and to rise further next year.

Chinas CIC wealth fund muscles up

China’s CIC wealth fund muscles up

China Investment Corp is investing as much overseas each month this year as it did in all of 2008, Lou Jiwei, the chairman of the $298 billion sovereign wealth fund, said on Saturday.

CIC is counting on handsome returns this year and might one day ask the government to hand it more of the country’s record hoard of foreign reserves to manage, Lou, a former vice finance minister, said.
The fund invested just $4.8 billion outside China last year as it kept its powder dry during the global financial crisis, when asset prices tumbled. It held fully 87.4 percent of its overseas investments in cash or cash equivalents.
Now that markets are recovering, CIC is constructing a broad-based portfolio, Lou told reporters on the sidelines of a forum organized by the Washington-based Brookings Institution and the Chinese Economists 50 Forum, a Beijing think-tank.
CIC posted a negative 2.1 percent return on its global investment portfolio last year as the value of stakes such as those in Wall Street bank Morgan Stanley and private equity giant Blackstone Group slumped.
But Lou said 2009 was shaping up better.
“It will not be too bad this year. Both China and America are addressing bubbles by creating more bubbles and we’re just taking advantage of that. So we can’t lose,” he said.
CIC was set up in September 2007 with $200 billion of foreign currency reserves transferred from the central bank, which manages its own stockpile of $2.13 trillion.
“If our returns are not bad and the state’s FX reserves are still rising, we may go and ask for more,” Lou said.
He said the risk of a decline in the dollar risks was more of a national issue for China than for CIC because its capital is in dollars.
Asked whether CIC would be a keen buyer in the United States, Lou said CIC can buy anywhere in the world, but it cannot avoid buying US assets because the American economy and capital markets are so large.
Lou said CIC was building a broad investment portfolio that includes products designed to generate both alpha and beta; to hedge against both inflation and deflation; and to provide guaranteed returns in the event of a new crisis.
“We have to be in everything because you never know what’s going to happen in this world,” he said.
As well as investing overseas, CIC controls Central Huijin, a company that holds the state’s shares in big commercial banks. The increase in the value of these stakes is the reason why CIC’s assets had soared to $298 billion by the end of last year.
Lou said he expected returns from Central Huijin to decline in coming years because domestic banks profits will come under pressure as their net interest margin shrinks.
Moreover, banks will have to bolster their capital base by issuing subordinated bonds or equity, diluting Huijin’s returns, he said.

Dell gets ready for rural push

Dell gets ready for rural push

US computer maker Dell Inc said on Friday that it would continue to expand its reach outside the top tier cities as it steps up its efforts to fuel growth in China.
Steve Felice, president, small and medium business, Dell, said on Friday that the company would expand its network in the mainland to lower-tier cities and rural areas for further growth.
“We don’t have a very big presence in the rural communities,” Felice said. “Our focus has been in the top tier cities, and we are now in the process of expanding our reach.”
But he said Dell would maintain its profitability during the expansion and conduct the whole process “in a prudent manner”.
The world’s second largest PC maker posted 21 percent decline in revenue in the second quarter, as consumers and companies reduced their spending on technology products amid the economic slowdown.

Felice said China appears to be emerging fastest out of the financial crisis. He said increasing demand from emerging countries like China and India would help grow revenues on an annual basis from 2010 onwards.
As part of its efforts to stimulate the domestic consumer market, the Chinese government launched a program earlier this year to give subsidy to PC buyers in rural areas, where most people do not have computers.
But foreign companies like Dell and HP only took less than 1 percent each of this market that saw 110,000 new computers being sold in the past three months. Lenovo Group, the country’s largest domestic vendor, accounted for nearly half of the sales.
Felice confirmed on Friday that Dell is teaming up with China Mobile to develop smart phones in the country, but declined to disclose details. It was expected that China Mobile would launch the device as early as next Monday.

Macquarie forms China trust joint venture

Macquarie forms China trust joint venture

Macquarie Group Ltd, Australia’s biggest investment bank has set up a trust company joint venture in China with an initial capital of 300 million yuan (44 million U.S. dollars), reported Friday’s China Daily.
The Shanghai-based joint venture, Sino-Australian International Trust Co., enables the global provider of diversified financial services to offer yuan-dominated products, arrange domestic debt and equity financing, the newspaper said, citing a statement released by Macquarie.
Macquarie owns 19.99 percent of the venture, the maximum allowed under current regulations. Beijing Sanjili Energy Co Ltd (Sanjili), a state-owned power generation company, owns 60 percent of the joint venture while Beijing Rongda Investment Ltd owns 20.01 percent.
Several State-owned firms including the State Development and Investment Corp control Sanjili and Rongda.
The joint venture will initially focus on raising funds for companies and local government entities and provide yuan-based investment products to wealthy investors and institutional investors, according to the newspaper.
Founded in 1969, Macquarie operates in more than 70 office locations in 26 countries. It employed approximately 12,700 people and had assets under management of 243 billion Australian dollars as of March 31, 2009.
Last week Macquarie and China Everbright Ltd had announced plans to raise 1.5 billion U.S. dollars for two funds to invest in infrastructure projects in China.

Jaguar Land Rover recalls “Discovery 3″

Jaguar Land Rover recalls “Discovery 3″

Jaguar Land Rover Auto Trade (Shanghai) Co. Ltd. is to recall some imported “Discovery 3″ SUVs because of brake and engine flaws.
It is estimated just over 1,000 of the diesel-fueled SUVs would be involved, said the General Administration of Quality Supervision, Inspection and Quarantine.
The flaw in the “Discovery 3″ SUVs, produced between Oct. 31, 2005 and June 26, 2009, leads to extended braking distances.
A smaller percentage of those, produced between June 2007 and May 2008, have a flaw in their high-pressure diesel pumps, which may lead to leakage, or even combustion in extreme cases.
The manufacturer will replace defective parts for free. Owners can go to their nearest maintenance center authorized by the manufacturer for check-up and replacement, or call 800-820-0187 for more information.

BP divests Ningbo LPG assets

BP divests Ningbo LPG assets

British oil major BP has sold its LPG (Liquefied petroleum gas) assets in the port city of Ningbo to a local trader of the fuel, the latest move by the oil giant to slim its LPG business in China.
BP sold the LPG assets in its subsidiary Ningbo BP LPG Co to Oriental Petroleum (Yangtze) Ltd, the British oil company said.
The deal was closed as of Aug 21, BP said in a statement, but did not disclose financial details.
Ningbo BP LPG Co operates a 500,000 cu m LPG terminal on Daxie Island, which is under jurisdiction of Ningbo city government.
The terminal, the largest in China, has two refrigerated caves each with a capacity of 250,000 cu m and a dock capable of berthing 50,000 dwt vessels.
The sale of Ningbo assets, according to industry experts, is a sign that BP is continuing its strategy of slimming down its LPG business in China, a practice they say the British company has been doing in the past several years.

BP, however, said the deal will not affect its commitment on China’s LPG market.
“This transaction does not affect BP’s commitment to provide quality products and services to our LPG retailing customers (in China),” BP said in a statement to China Daily yesterday.
In addition to Ningbo LPG assets, BP owns the 400,000 cu m Zhuhai LPG terminal in southern China’s Guangdong province, China’s second-largest terminal.
Zhangjiagang Oriental Energy Co, which is controlled by Oriental Petroleum (Yangtze) Ltd and listed in Shenzhen, is likely to operate the Ningbo LPG assets.
The Ningbo deal comes on the heels of another BP asset sale in China.
BP last month signed a conditional agreement with the Hong Kong-based Friendly Energy to divest its refrigerated tanks and some related facilities in BP’s LPG terminal in Suzhou in East China’s Jiangsu province.
The Suzhou LPG terminal has a capacity of a 68,000 cu m and consists of two refrigerated storage tanks both with a capacity of 31,000 cu m and six pressurized storage tanks with a capacity of 1,000 cu m.

Steel maker shows his mettle in take-over bid

Steel maker shows his mettle in take-over bid

Shandong Iron and Steel Group, the world’s eighth largest steel maker, is suffering a setback in its proposed takeover bid for Rizhao Iron and Steel Group over differences in the terms of the deal.
Du Shuanghua, the founder of Rizhao Steel, one of China’s most profitable non-State steel mills, is employing delaying tactics against the purchase of a 67 percent stake in the company, according to people familiar with the situation.
In addition, Du was likely to consider moving to another province to restart his steel empire, according to insiders at the company.
The acquisition, which was expected to be pushed through as early as this week, was still under discussion and would probably be finalized next week or by the beginning of September, a senior executive at Rizhao Steel told China Daily.
Another source said the protracted talks are related to the financial terms of the deal. Shandong Steel’s acquisition is not thought to be all in cash. Instead, the company is expected to inject assets such as modern equipment in return for a controlling stake.
Du tried to protect his interests in the consolidation by handing up to 30 percent of Rizhao’s core assets to Kai Yuan Holdings, a Hong Kong-listed company in January.
Although Rizhao Steel is attempting to fight the acquisition, it has to weigh the repercussions of not cooperating with local authorities.
Officials from the local environment watchdog visited Rizhao Steel recently and asked the company to stop production using two boilers, on the grounds the facilities were not in accord with environmental standards, the source from Rizhao Steel said.

A senior official of neighboring Hebei province talked to Du recently, suggesting he should move back to Hebei, where he was born and started his business making steel tubes, the source said.
The consolidation is part of a plan by the Shandong provincial government to build a quality steel production base in Rizhao city with annual capacity of 20 million tons.
Rizhao and Shandong Iron and Steel signed a letter of intent for consolidation in early November. But the deal broke up after Du moved 30 percent of his stake to Kai Yuan Holdings.
“The Shandong provincial government aims to build a large steel group that can compete on the world stage,” said Yu Liangui, a steel analyst from Mysteel. “The steel industry wants to develop a steel industrial zone along the coastline. Rizhao has an advantage over Laiwu Steel and Jinan, in terms of regional position.
“If Shandong Steel has to establish a new factory in Rizhao in response to the government’s plan to build a quality steel production base in Rizhao, it will be in a disadvantageous position if it is facing competition from Rizhao Steel.”
China, as the world’s largest producer and consumer of steel production, is at a disadvantage in the annual international iron ore negotiations because of its limited presence in the industry.
The government wants the steel industry to consolidate, with large steel mills leading the exercise.
Du established Rizhao Steel in the city of Rizhao in 2003. Now the steel mill produces 8 million tons of crude steel annually and contributes one third of GDP to the city.
The Hurun report listed Du as China’s second-wealthiest person last year, with a 35-billion-yuan fortune.
When most Chinese State-owned steel mills suffered heavy losses, Rizhao reported a net profit of about 1.8 billion yuan in the first half of 2009, while Shandong Steel, which has three times the capacity of Rizhao, reported a loss of 1.3 billion yuan.

Siemens bought two Chinese metal companies

Siemens bought two Chinese metal companies

German industrial conglomerate Siemens AG bought majority stakes in two small Chinese metal companies on Wednesday.
Siemens, based in Munich, said its energy division acquired the majority stakes in two metal companies based in Hangzhou, Zhejian gprovince. One is Yangtze Delta Manufacturing, a metalworking company, and the other is aluminum foundry GIS Steel&Aluminum Products, according to local media reports.
Siemens said the two companies had a total workforce of 600 employees, with combined revenue of 65 million euros (about 93 million U.S. dollars) in 2008, but it did not release how much it paid to bought these two companies.
Siemens made these two acquisitions to expand its global production network for high-voltage circuit breakers in China and its foundry capabilities from machining through final product assembly, according to the local media reports, as China is now the world’s largest market for power transmission equipment.
“Over the long term, we are anticipating a constantly high demand for high voltage power transmission products in China and are thus securing the requisite capacities to maintain our successful business in this growth market,” Udo Niehage, Siemens’ chief power transmission official said in the company’s statement.