The inter-connected world we live in…

Bloomberg’s story, Landowners Shout `Bingo’ as West Australia’s Mining Towns Boom, grabbed my attention earlier

Karratha, Western Australia - Wikicommons

today, which was odd because my “news radar,” doesn’t usually sound for real estate related content.

The article describes a interesting catch 22 which has developed in the North Western State of Karratha in Australia.  This region which is home to 62% of Australia’s mineral production, 75% of its natural gas and 64% of its crude oil is experiencing a massive boom.  The region is also known as one of the most inhospitable places in the world to live.

The state is gigantic by most standards (4x the size of France), but is only home to around 15,000 official full time residents.  The rest are known as “fly in, fly outs.”  Most work in a commodity related industries, and most of the production goes to feeding China’s growth.

The result has been:

• Housing shortages because there simply aren’t enough workers to build them
• Massive surge in housing prices, on a scale not seen in any other part of Australia
• Problems attracting workers and people to work in related services because salaries are too low to support living there

We really all do live in a inter-connected world.  I doubt the residents of this Australian state would have predicted 20 years ago that China’s boom would be their heart ache as they struggle to afford to keep their homes…

Click here to read the article from Bloomberg.

Jiangxi Copper to Raise $1 Billion to Fund Mines in Peru and Afghanistan

Bloomberg has reported in this article, China’s Jiangxi Copper Co., China’s largest producer of copper, plans to raise a whoppin 6.75 billion yuan ($1 billion usd) from exercising its warrants issued in 2008 for the funding of projects in Peru and Afghanistan.

The company said it will exercise the warrants from Sept. 27 to Oct. 8. Jiangxi Copper and partner China Minmetals Nonferrous Metals Co. bought Northern Peru Copper Corp. for C$455 million ($430 million) to develop the Galeno copper and gold deposit in Peru.

The project, in which Jiangxi Copper owns a 40 percent stake, is scheduled to produce 200,000 metric tons of copper from 2012, the company said.

Click here to read the complete article from Bloomberg News

Playing The China Game – CNBC

Michael Kurtz, China strategist at Macquarie Securities, believes risk tolerance is back on the table in China. He tells CNBC‘s Bernard Lo that the biggest value in the mainland markets can be found in the cyclical stocks and banks.

Must read article about Sino-Latin American relations

A must read article for anyone interested in Sino-Latin American relations was published today on SeekingAlpha’s website.  It is written by Erik Bethel, one of the four founders and CEO of Sino-Latin Capital.  I highly recommend it to anyone even mildly interested in the growth of Sino-Latin American relations.

Click here to access the full article direct from SeekingAlpha.

Travel to any country in Latin America and you will see the visible hand of China at work: a computer manufacturing plant in Mexico, a copper mine in Peru, a football stadium in Costa Rica. In the year 2007, the thought of China in Latin America would have appeared, at best, improbable. But in a three-year stretch, China signed free trade agreements with Chile, Peru and Costa Rica, inked billions of dollars worth of deals in oil and mining projects throughout the region, and supplanted the US as Brazil’s biggest trading partner. Once almost unseen in Latin America, China’s bilateral trade has risen from $12bn in 2000 to well over $150bn today.

Given the importance of its new Asian friend, Latin Americans are rolling out the red carpets to Chinese business delegations and jumping on planes not only to Beijing but also to Shanghai, Shenzhen, and Tianjin.

Rationale Behind Chinese Investments in Latin America [...]

Please visit SeekingAlpha to read the full article

Crude Oil and China

New measures show China imports record level of crude oil. Inventory replenishment is cited as a driver. [Tantao News]

Newswire: Peru, Gold, Mining Exports

Peru’s gold project portfolio demands US$ 4.5 billion investment — Andina

The portfolio of gold projects identified in Peru are likely to demand an investment of US$ 4.5 billion investment in the next six to eight years, which shows the country’s great mining potencial, reported Wednesday Peru’s National Mining, Petroleum and Energy Society (SNMPE).

Gold production in Peru to increase by 10% this year — Andina

Peru’s gold production would register an increase of 5-10% by the end of 2010, totaling 200.2 tons, Peru’s Mining, Petroleum and Energy Society (SNMPE) estimated today.

Peru’s mining exports up 53.8% totaling US$ 3.1 billion in January-February — Andina

Peru’s mining exports in the first two months of the year totaled US$ 3.1 billon,a 53.8 percent rise compared to the same period last year, the Ministry of Energy and Mines (MEM) reported.

Chinese companies step up their game; plan $3.1 billion investment in Argentina

Hot off the presses — CNOOC, has announced plans to step up its overseas acquisitions with a planned purchase of a 50% stake in Argentina’s second largest oil producer Bridas Corp, a subsidiary of Bridas Energy.  If the deal goes through Bridas Energy would become equal partners with CNOOC in Bridas Corp.

Bridas is controlled by the wealthy Argentine businessman Carlos Bulgheroni who also owns a nice 40% stake in Pan American Energy LLC, Argentina’s largest crude oil exporter.  Pan American Energy LLC also owns energy assets in Chile and Bolivia–which China may eventually like a piece of as well.

As the worlds second-biggest energy consumer, after the United States, China is searching for oil assets across the world.  This however, would be the first major purchase by CNOOC, China’s biggest offshore oil explorer in Latin America.  Since 2008 Chinese companies have spent around $13 billion usd on energy acquisitions and are currently bidding for assets in countries ranging from Ghana, Nigeria and Uganda.

Analyst, Neil Beveridge of Sanford C. Bernstein & Co., told Bloomberg in this article, “This seems like a relatively attractive valuation and the acquisition is entirely in keeping with the Chinese government’s policy of increasing oil reserves.”

Once again, China is on the move people.  As I sit here typing this post I can feel the cold air blowing back into Shanghai and I am thinking to myself how if this entire country had two space heaters running like I do right now the world might self-implode… (just a bit of sarcasm incase you didn’t catch it).

China’s private sector ventures into Latin America

A private Guangdong based firm by the name of Rixin Development, has reached an agreement to buy a majority stack in the ownership of a Chilean iron ore mine.

Rixin Development will acquire a 70% stake in the Chilean property.  Such a deal shows the power of China’s up and coming company’s.  For starters,  Rixin Development is listed only on a local provincial enterprise information website,  sdwin.com.  The company does not have its own home page.  Officially it is a “trader for home appliances, textiles, auto parts and so on, and importer and exporter of various products and technologies.” However, I wish any readers the best of luck if they undertake the challenge to find any further information from a official company medium.

If you follow Alibaba.com’s 101 on how to avoid being scammed in China, such a deal should probably send alarm bells off.   Perhaps in the post, economic-recession world of 2010, the traditional elements which define a professional entity are no longer necessary.  Especially when your a developing Latin American country hungry for investment… or a private investor in China, STARVING for investment opportunities in a very over-saturated market with little options on where to park your capital and have it grow at the same time.  It is clear, the deal is going through and that the company is legitimate.

Li Zihao, president of Rixin was recently quotes saying, “privately-owned companies are in a better position to invest in overseas natural resources.” Time will tell if this is actually true, or if the central government is content with allowing such a dynamic to emerge.

Read a more comprehensive article on the facts (which are known) surrounding this deal via this article over at ChinaMining.org.

China’s Africa goals more than just natural resources – Reuters

~ Gavin Coates

BEIJING (Reuters) – Barely a month goes by without some new energy or mineral deal being struck between China and an African nation. These deals have transfixed the West, but China gets far more from the relationship than raw resources.

Africa offers China two important things — a chance to earn the global respect it believes it deserves in recognition of its growing economic clout, and friends who do not judge it, or who at least have little reason to directly fear China’s rise.

China’s friendly relations with Africa go back decades, to when Beijing backed newly independent states as well as liberation movements. The continent’s backing was vital in getting China into the United Nations in 1971.

“You could argue that the contemporary driver is economic, but they’ve always had a political interest in Africa, from the mid-1950s onward,” said Chris Alden, an Africa expert at the London School of Economics.

“As China becomes a more active player in multilateral affairs, it recognizes it needs partners, and Africa in many ways is a very suitable partner.”

In 2006, President Hu Jintao promised a leap in investment, trade and aid at Beijing’s first summit with African leaders. At the G20 summit of big developed and developing economies last November, he raised Africa’s needs during the global economic turmoil.

Click here to read the complete article written by Reuters reporter Ben Blanchard

China’s seemingly unending quest for resources continues

Sinopec Corp. announced today that it expects to incorporate parts of its overseas assets from its parent company Sinopec Group into its listed listed company in China.

Wang Xinhua, chief financial officer (CFO) of the oil firm  said “the good overseas assets of the Sinopec Group, the parent company of Sinopec Corp., would be injected into the listed company before the end of the year.”

CSA smell’s a bid to strengthen the traded shares, especially once Chinese investors jump on the bandwagon.

The assets in question are found in countries ranging from Russia, Australia and Canada.   Company data indicates that by the end of 2008, Sinopec’s overseas recoverable reserves reached 160 million tons.

According to this ChinaMining.org article Sinopec Groups oil equity production in 2008 was 9.01 million tons, accounting for up about one-third of Sinopec’s total output.  This year overseas oil equity output will rise to roughly, 17.40 million tons, almost double the previous year.

Qiu Xiaofeng, an analyst with Merchants Securities, reckon that the Sinopec Group’s overseas assets are able to generate about 11.2 billion yuan of profit or 0.13 yuan EPS, if the oil price stays at 75 US dollars/barrel.  On the news, Founder Securities maintains its rating of “overweight” on Sinopec Corp.  A-stock.

Here’s a look at the two year performance of this growing Chinese energy giant’s shares on the NYSE.

SHI - NYSE