|
|
|
ONLINE FEATURES
Book Reviews
BW Video
Columnists
Interactive Gallery
Newsletters
Past Covers
Philanthropy
Podcasts
Special Reports
BLOGS
Auto Beat
Bangalore Tigers
Blogspotting
Brand New Day
Byte of the Apple
Economics Unbound
Eye on Asia
Fine On Media
Green Biz
Hot Property
Investing Insights
Management IQ
NEXT: Innovation
NussbaumOnDesign
Tech Beat
Working Parents
TECHNOLOGY
J.D. Power Ratings
Product Reviews
Tech Stats
Wildstrom: Tech Maven
AUTOS
Home Page
Auto Reviews
Classic Cars
Car Care & Safety
Hybrids
INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads |  |
DECEMBER 3, 2007
The Coming Commodity Clash Voracious demand from fast-developing countries sets the stage for a face-off over industrial assets The global scramble to lock up critical energy and industrial commodity assets is fast, furious, and unlikely to abate anytime soon. That reality is behind the outcry from Japanese, Korean, Chinese, and European steelmakers over the proposed $138 billion merger of Australia's BHP Billiton (BHP ) and Anglo-Australian mining giant Rio Tinto (RTP ), which together would control nearly one-third of global iron ore supplies. Iron isn't the only hot commodity these days. Aluminum, zinc, copper-- and, of course, oil--are all much in demand, particularly from the rapidly industrializing economies of China and India. The competition for resources could color the global inflation outlook and industrial merger strategies. There is already consternation in Washington over China's investment strategy in Iran and its dealings with autocratic regimes in Africa, for instance. Consider the rapacious commodity needs of China. This hungry dragon will consume about 35% of the world's iron ore output, 30% of its aluminum, 25% of its zinc, and 23% of copper supplies by 2010, according to estimates by Deutsche Bank (DB ). And India's iron ore demand is expected to double to 150 million tons a year by the end of the decade. "China and India have a very strong appetite for commodities," says Deutsche Bank analyst Amanda Lee. "They need to secure a future supply and are investing in natural resources all over the world." Flush with cash, Chinese state-linked companies have been aggressively shopping for energy assets in Central Asia and Africa. CNOOC (China National Overseas Oil Co. (CEO )) paid $2.7 billion for a 45% stake in a Nigerian oil field last year. China National Petroleum is already the top foreign investor in Sudan, thanks to its energy investments, and paid $4.2 billion for PetroKazakhstan in 2005. Now, Indian companies are also getting acquisitive. Tata Power in April announced it is paying $1.1 billion for stakes in two Indonesian coal mines. India's Jindal Steel & Power is set to become Bolivia's largest foreign investor after agreeing in July to sink $2.1 billion into an iron ore mine and steel mill project. Ratan Jindal, CEO of affiliate Jindal Stainless, says he hopes to get his hands on manganese and chrome ore operations in Turkey--that is, unless some Chinese rival gets there first. "We bump into Chinese companies everywhere," he says.  By Frederik Balfour and Manjeet Kripalani
BW MALL
SPONSORED LINKS
Get BusinessWeek directly on your desktop with our RSS feeds.
Buy a link now! Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
 Copyright 2007, by The McGraw-Hill Companies Inc. All rights reserved.Terms of Use | Privacy Notice |
Printer-Friendly Version