Fox Resources in talks for Chinese partner

Fox Resources in talks for Chinese partner

Fox Resources Ltd, backed by China’s Jinchuan Group Ltd, is in talks with a potential Chinese partner to help develop an iron ore project in Australia.
Executives from a State-owned steel mill, one of China’s top-five producers, are scheduled to visit the site later this month, Bruno Seneque, managing director of the Perth-based nickel and copper company, said yesterday in an interview to Bloomberg, declining to name the mill.
China has proposed 90 investments in Australia valued at about A$34 billion ($32 billion) in the past 18 months, the Canberra-based Foreign Investment Review Board said in September. CITIC Pacific Ltd, a unit of China’s biggest State-owned investment company, is building a $4-billion magnetite iron ore mine in Western Australia to meet surging demand.
Fox aims to agree an initial accord with a Chinese partner by the end of the first half of next year, Seneque said in Melbourne. The company is seeking to boost estimated resources at the project to 1 billion tons of ore, from 72.4 million, he said.
Shares of Fox closed 4 percent higher yesterday to 26 cents on the Australian stock exchange. Jinchuan, China’s biggest nickel producer, is the company’s second-biggest shareholder with a 10.4-percent stake. Chairman Terry Streeter is the company’s biggest shareholder with a 17.6-percent stake.
The Mount Oscar project is located 30 km from Western Australia’s northwest coast and a study has shown it’s capable of producing 8 million tons of concentrate a year, Seneque said. A possible accord will follow a similar investment model to that used by Centrex Metals Ltd, which agreed an investment of A$271-million with Wuhan Iron & Steel Group.
Wuhan agreed this year to buy a 60-percent stake in the iron ore rights of five of Centrex’s projects and a 13-percent interest in the company. Fox also plans to use some funds from its Chinese partner to finance the A$15-million restart of its Radio Hill copper and nickel operation, also in Western Australia, planned for the third quarter of 2010, Seneque said.
Magnetite ore is a lower grade of iron that needs more processing than higher-grade hematite ore, which accounts for most of Australia’s output. Australia’s Atlas Iron Ltd has hired Goldman Sachs JBWere Pty to help it sell a majority stake in its Ridley magnetite project, which was estimated to cost A$3 billion to develop.

BYD wins backing to make e6

BYD wins backing to make e6

New-energy vehicle and battery manufacturer BYD Automobile Co said Monday that it has won approval to produce the e6, its first pure electric car, in the country.

A BYD official said the e6 accelerated the auto maker’s new-energy vehicle strategy and will help domestic car makers compete against international rivals.

BYD Auto’s e6 is presented during the 2010 North American International Auto Show (NAIAS) at Cobo center in Detroit, Michigan, U.S.A., Jan 11, 2010. (Xinhua/Zhang Jun)
China-based BYD, backed by billionaire Warren Buffet, will launch the plug-in e6 sedan in China in the first half of this year for about 300,000 yuan (43,988 U.S. dollars), mainly supplying government, public services and taxi fleets. BYD also plans to sell the e6 in the United States at the end of this year with a price tag of about 40,000 dollars.
With government support, hybrid and electric vehicles are becoming an industry trend as consumers seek ways to reduce emissions to protect the environment. Demand for such vehicles has prompted car makers to increase investment and speed up engineering in the field.
General Motors plans to launch its extended-range electric car Volt in the US this year before introducing it to China in 2011. Nissan plans to launch its Leaf plug-in electric car in 2012.
BYD said the e6 is a sedan powered by a lithium iron phosphate battery.
The car promises a battery-only range of 330 kilometers on a single charge. The battery can be quick-charged to 50 percent of capacity in 10 minutes, and fully charged in 60 minutes.
Aside from intensifying competition, car makers also face challenges convincing consumers about the benefits of new-energy vehicles as some people worry about inconvenience due to the lack of charging stations.
Auto makers also face issues over heavy batteries, which reduce the efficiency of electric cars, and recycling batteries.
Wang Chuanfu, chairman of BYD, said recently that the car maker is aiming to become the world’s largest auto maker by 2025. Last year, BYD saw sales jump 130 percent to 400,000 vehicles. It set a sales target of 800,000 units this year.
At the ongoing Detroit auto show, BYD was the only Chinese car maker to attend. Its lineup also included the F3DM, the world’s first dual-mode plug-in hybrid.
Besides BYD’s e6, the new-energy vehicles the government approved included Dongfeng’s Fengshen S30 and Changan’s Zhixiang.

XD Electric float hopes to generate 10.27b yuan

XD Electric float hopes to generate 10.27b yuan

China XD Electric Co, the country’s largest maker of electricity transmission and distribution equipment, plans to raise as much as 10.27 billion yuan ($1.50 billion) in the first major initial public offering (IPO) this year.
XD Electric, which hopes to sell up to 1.3 billion shares in its Shanghai IPO, said it had fixed the price range for the share offer at 7.1 to 7.9 yuan. That differs from the 7.4 yuan-9.6 yuan range forecast by its underwriter, China International Capital Corp (CICC).
In a statement to the Shanghai Stock Exchange yesterday, the company said the pricing would give XD Electric a maximum price-earnings ratio of 34 times its 2008 net profit per share.
That would give XD Electric’s offer a relatively low valuation, as China’s lackluster stock market has seen weakened IPO share demand and less frantic debuts of new listings. This may force Chinese companies to rethink expensive IPO prices.
New IPOs have traditionally attracted huge speculative interest in the nation’s stock market. Chinese companies typically set their price earnings ratio high, often 50 times their historical earnings.
Investor interest in new IPOs has been dampened by government efforts to cool down the market, and accelerate approvals of new share offerings to counter a potential stock market bubble.
Firms that launched IPOs late last year – such as China Merchant Securities Co and China CNR Corp – have had to watch their shares drop below the IPO price.
Based in Xi’an, Shaanxi province, XD Electric has previously said it needed 7.72 billion yuan in IPO proceeds to fund expansion plans and technical upgrades.

The company took subscriptions from institutions yesterday and will open to retail investors today. It plans to sell 40 percent of the IPO to institutional investors and the rest to retail investors, according to the firm.
XD Electric’s move to set the IPO price range may not be good news for Chinese firms looking to go public this year.
According to figures from PricewaterhouseCoopers, domestic IPOs may raise more than 320 billion yuan this year, up 73 percent over 2009 figures.
Dozens of other firms, including China First Heavy Industries Co and Huatai Securities, have won regulatory approval and are now on the IPO waiting list. Efforts by the government to stimulate the economy last year resulted in a huge influx of hot money into the domestic stock market. Last year’s sluggish export demand has also encouraged some domestic firms to reduce production capacity and shift more cash into real estate and stocks.
Since early September 2009, the Shanghai Composite Index jumped 27 percent in less than three months.

Shanxi sees higher coal output

Shanxi sees higher coal output

Coal industry consolidation in Shanxi province is on track and may lead to a boost in output soon, even as the government maintained that prices of the commodity would remain stable this year.
Shanxi, which accounts for nearly one-fourth of the country’s coal needs, intends to step up its output by 80 million tons this year to 700 million tons, said Wang Shouzhen, director of the Shanxi Coal Industrial Bureau.
The expanded output is expected to bring some cheer on the price front after prices of the commodity rose sharply in the past few days as demand peaked and supplies dwindled due to transportation problems.
“Coal prices should be relatively stable this year. Though some areas are facing temporary coal shortages, the government is taking steps to address the problem,” said Wu Yin, deputy administrator of the National Energy Administration.
The government is also urging the industry to step up consolidation moves in other provinces and also taking adequate steps to ensure that demand is satisfied, Wu said.
Shanxi started the restructuring moves in April 2009. The central government launched a pilot project in the province to reduce the number of mines and companies.
By the end of last year, the province reduced the number of coal firms from 2,200 to 130. Of the 130 companies, 50 percent are shareholding companies while 20 percent are State-owned and the rest are private firms.
State-owned coal companies, such as Datong Coal Mine Group and Shanxi Coking Coal Group, still account for nearly 40 percent of the overall capacity in the region, said Wang.

As part of the plan, private firms were encouraged to merge or acquire smaller coal producers. The government also indicated that it would shut mines with annual production capacity of less than 300,000 tons by the end of this year.
Overseas firms from South Korea and Hong Kong have acquired stakes in local firms, said Wang without elaborating.
At the same time the government is also encouraging domestic energy firms to look out for overseas opportunities.
China will “actively take part” in the distribution and competition of global strategic resources such as oil, gas and mineral resources, said Zhang Xiaoqiang, vice-minister of the National Development and Reform Commission, in a statement posted on the commission’s website yesterday.
Yanzhou Coal Mining Co Ltd has already completed all the legal proceedings for acquiring Australia’s Felix Resources Ltd in December last year. 

Glittering gold scales new peak

Glittering gold scales new peak

A customer looking at a gold tiger on display at a shopping mall in Shenyang, Liaoning province. Bullion gained more than 50 percent last year from $801 an ounce in January to $1,226 an ounce in December. [China Daily]

The yellow metal’s allure as a solid, tangible, intrinsically valuable store of wealth seems to be growing further in China with the nation soon set to surpass India as the biggest consumer.
China is already the largest gold producer in the world with an output of around 282.504 tons in the first 11 months of 2009. That figure represents a 14.6 percent increase over the same period in 2008, said the Ministry of Industry and Information Technology on its website yesterday.
Miners expanded output last year after bullion prices soared to record highs, with production in November alone reaching 27.952 tons, said the ministry.
Bullion gained more than 50 percent in 2009 from $801 an ounce in January to $1,226 an ounce in December as a weak dollar drove demand for precious metals as alternative assets.
According to China Gold Association, the estimated demand for gold in the country was 450 tons in 2009, up 13.8 percent from 395.6 tons in 2008.
“With household income increasing, Chinese consumers are buying more jewelry and investing in gold assets. All of these are boosting gold demand,” said Zhang.
China overtook South Africa as the world’s largest gold producer in 2007. The World Gold Council said in July that the country would soon surpass India as the world’s biggest gold consumer.
Reflecting the buoyant industry trend the big five gold producers came in with better output numbers last year. Zijin Mining Group Co Ltd, China National Gold Group Corporation, Shandong Gold Group Co Ltd, Shandong Zhaojin Group Co Ltd and Lingbao Gold Company Ltd together produced 112.19 tons of gold in the first 11 months of 2009, up 13.5 percent from the same period of 2008.

The surging prices also pushed up share prices of gold miners. Zijin, the largest gold producer in China, closed at 9.64 yuan on the last trading day of 2009, marking an almost 50 percent gain in a year.
Zhang Bingnan, general secretary of CGA, feels that Chinese gold miners can still boost output further.

China starts building Lanzhou SPR base

China starts building Lanzhou SPR base

China has started building the Lanzhou strategic oil reserve base in northwestern Gansu province after kicking off construction on Dushanzi state oil tanks in Xinjiang in September, part of China’s second phase of its strategic oil stockpiling plan.
Officials from the National Development and Reform Commission (NDRC), the National Energy Administration, top oil firm CNPC and local governments attended a groundbreaking ceremony on Dec 29, CNPC said in a report on its website on Tuesday.
The Lanzhou base, with storage capacity of 3 million cubic meters or around 18.9 million barrels, is expected to cost 2.38 billion yuan ($348.6 million) and be ready for use in the first half of 2011, the report said.
CNPC, parent of PetroChina, will also build production and operation oil reserve tanks as a supplementary facility to the state oil reserve base that occupies 88.5 hectares of land, the report added.
It did not specify the capacity of the supplementary facility.
China’s NDRC, China’s top economic planner, approved the project in November 2009, the report said.
The first phase of Dushanzi state oil reserve tanks in Xinjiang, with capacity of 3 million cubic meters, will cost 2.65 billion yuan and is due to be finished by July 2011.
China has said it will build the second-phase of a strategic crude oil reserve with a capacity of 26.8 million cubic meters, or nearly 170 million barrels, after filling its first four reserve bases that have total capacity of 100 million barrels.

GM: China vehicle sales up 67% in 2009

GM: China vehicle sales up 67% in 2009

General Motors’s China vehicle sales in 2009 jumped 66.9 percent from a year earlier, the company said on Monday.
General Motors and its joint ventures sold 1.83 million vehicles in the country last year and expanded its market share to an estimated 13.4 percent, up from 12.1 percent at the end of 2008, it said in a statement.
Auto sales in China, the world’s largest market, surged last year boosted by government incentives aimed at bolstering domestic demand.

China vies to build Hainan into intl resort

China vies to build Hainan into int’l resort

The Chinese government said on Monday that it aims to build the southern island of Hainan into a top international tourism destination by 2020.

Photo taken on December 2009 shows the panorama of a construction site of a tourist resort in Qionghai of south China’s Hainan Province. The southernmost island province will be shaped into a world top class tourist destination by 2020, according to a State Council announcement released on Monday. [Photo/Xinhua]
The country also plans to develop the only tropical island province to be a platform for international economic cooperation and cultural exchanges, according to a statement of the State Council, or the Cabinet, released on Gov.cn, the official web portal of the Chinese government.
The island will also become a base of agricultural production and a base for developing resources and services in the South China Sea, said the statement.
The government said it would maintain the healthy development of the island’s property sector and encourage developers to build premium hotels and resorts. It also supports family-run hotels and property-rental services.
Efforts should also go to the financial sector in the island by pushing forward the trial program of cross-border trade RMB settlement and backing qualified tourism firms to get listed in the stock market.
The plan also includes measures to promote modern tropical agriculture in Hainan, including tropical fruits, aquatic products and others, and expand its agricultural cooperation with Taiwan.
The government will further extend its favorable visa-free policy to five other nations including Finland, Denmark, Norway, Ukraine and Kazakhstan from the previous 21 nations including the United States, Japan and Canada.
The statement also said the government would boost the island’s development by expanding oil and gas exploration, offering more duty free services, improving transportation networks, developing logistics, reducing pollution, building more information networks and infrastructure.
The government plans to lift the value-added output of tourism in Hainan to more than 8 percent of its gross domestic product (GDP) by 2015 and more than 12 percent by 2020, the statement said. Figure of how much value-added output of tourism accounted for in the province’s GDP in 2008 was not available.
Hainan’s preliminary GDP stood at 145.9 billion yuan (US$21.36 billion) in 2008, up 9.8 percent year on year.

Snow cripples apartment sales

Snow cripples apartment sales

Only 30 second-hand residential apartments sold in the first two days of the New Year, a drop of 37.5 percent compared to 2009 and 67.7 percent for the same period in 2008, the Economic Information Daily reported.
“It’s still in the New Year holidays and the heavy snow prevents people going outdoors,” said Hu Jinghui, vice president of 5i5j, a real estate agency based in Beijing.
“Plus the housing demand may have been satisfied by the year end,” added Hu. A total of 1,675 apartments were sold during the last two days of 2009.

Beijings biggest diamond shop launched

Beijing’s biggest diamond shop launched

Beijing’s largest diamond marketplace “Make Lumer Shopping Plaza” opened for business during the New Year’s Day holiday.
With a floor space of 10,000 square meters and located in Solana, M&L plaza, they offer diamond categories that could be 20 times that of traditional diamond shopping centers. And it also offers buy-back services for diamonds with a weight more than 0.3 carat.
Industry statistics show China, which saw a 15 percent growth of diamond consumption last year, is the only country that experienced an increase in diamond consumption in the global financial crisis.
China has been a major consumer for diamonds in the world. The transaction value of Shanghai Diamond Exchange, the only diamond exchange in China, reached $1.37 billion in 2008.