By now you’ve read a million stories on China’s aggressive acquisition of natural resources all over the world, but here’s a story with a little bit of a twist.In Australia and New Zealand, Beijing is spending millions to fund upstart miners in the hopes of undermining the world’s big two: Rio Tinto and BHP Billiton.
The New Zealand Herald reports that Chinese state-owned enterprises have funded at least 20 firms, in order to bust the big duopoly.
Whereas in the past, only the big ones could compete for large-scale resource deals, Chinese money is changing the playing field:
In Fortescue’s 2009 annual report to shareholders, [CEO Andrew] Forrest wrote that his company was battling against BHP and Rio Tinto on their home mining turf of the Pilbara, a northern region possessing the nation’s richest iron ore deposits.
“Your company has shattered the iron ore duopoly which existed in the Pilbara for many decades and firmly established itself as a vital alternative supplier of iron ore,” wrote Forrest.
Not only is China trying to bust the duopoly through cash, some suspect it’s using non-market means, like its pursuit of Rio Tinto execs on spying charges (a charge that originally came after Rio Tinto and BHP tried to merge, a scuttled deal that originally prompted howls of outrage in Beijing).
Bottom line, there’s probably tons of money to be made selling commodities to China over the coming years. Who actually wins big, however, remains an interesting question.
For more on Chinese commodity demand, see this presentation from the miner Vale >
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