Posted on 09/18/2010 6:24:01 PM PDT by TigerLikesRooster
By staff reporter Yan Jiangning 09.17.2010 12:56
China's Next Resource Push Targets Potash
Keeping Chinese farms supplied with fertilizer is the goal of a Zhongchuan Mining initiative at a Canadian mine
(Beijing) -- Ever since the world's top mining concern BHP Billiton announced August 18 that it was bidding for Potash Corp. of Saskatchewan, the world's largest potash producer, resource anxiety has been rising in China.
Access to affordably priced potash that China needs to fertilize farm crops could become more challenging if BHP buys the Canadian company.
China fears a new resource struggle similar to the battle it's waged over iron ore dug from overseas mines – including some under BHP control – whose owners have become increasingly concentrated in recent years. So it yearns for ways to control prices and maintain supplies of Canadian potash.
(Excerpt) Read more at english.caing.com ...
P!
No problem China just use people!
I just find it hard to believe that in the vast area of China there aren’t many large Potash deposits. Something’s wrong here.
This is a typical Chinese mindset. They do not feel secure until they have the whole world in their grip.
If you corner the market in potash, you corner the market in fertilizer . . . and everyone needs fertilizer. You need to start thinking in Chinese.
And we won’t drill for oil?
no drill for oil: redemption from sin of abusing Nature.
apologizing for China: redemption from sin of our past arrogant hegemonic behavior
Conclusion: for Dems, their redemption can't be more complete. They feel so proud of their ‘superior conscience.’
China’s Potash Hypocrisy
Posted: Sep 16, 2010 10:21 AM by Stephen Simpson
Filed Under: Fundamental Analysis,Stock Analysis,Stocks
Tickers in this Article: ACH, BHP, BYDDY, LYSDY, POT, PTR, SNP
If nothing else, China has chutzpah. China’s government put out a statement early on Wednesday indicating that it was paying “close attention” to the possibility that BHP Billiton (NYSE:BHP) would succeed in its bid to acquire Canadian fertilizer giant Potash (NYSE:POT). In mentioning that a so-called BHP potash monopoly would “harm global interests” and that prices are already “unbearable” for Chinese farmers, it would seem that this is a not-so-subtle shot across the bow for not only BHP, but perhaps Canada as well.
Given that BHP Billiton has a significant stake in Chinese potash company China Sinofert, China actually does have some influence in this process and could certainly apply pressure to BHP through that investment. Moreover, there is still the possibility that a Chinese investment fund or company could make a competing bid for Potash - even as large Chinese companies seem reluctant to commit to much interest in such a move.
Do As We Say, Not As We Do
The irony in China complaining about a potential monopoly comes from the government’s own efforts over the past decade to lock up more and more resource assets for its own companies. China’s government has shown no hesitation in using national resources to secure favorable access for energy companies like China Petroleum and Chemical Corp (NYSE:SNP), PetroChina (NYSE:PTR) and CNOOC (NYSE:CEO), as well as metals companies like Baosteel, Jianxi Copper and Chalco (NYSE:ACH).
China’s government has facilitated this on multiple fronts. First, it is pretty clear that the government has been, at a minimum, highly supportive of its large banks lending money to resource companies to acquire businesses and assets. More blatantly, the government has also given all manner of aid to developing countries, including military aid, to grease the skids for favorable development deals for Chinese companies.
Perhaps the best-known example is in China’s policy towards rare earth elements. A surprisingly large percentage of the world’s rare earth elements are sourced from China, and these are critical components in a variety of modern devices, including batteries, motors, optoelectroncs, and so on. Recently, the Chinese government has been making more and more noise about restricting the export of these metals - a clear threat, then, to a variety of companies and industries around the world and perhaps a boon to Chinese companies like BYD (Nasdaq:BYDDY).
The Bottom Line - Adapt Or Else
Ultimately, China’s moves to lock up resources like rare earth elements will likely prove futile. Companies like Rio Tinto (NYSE:RTP) and Lynas (Nasdaq:LYSDY) will develop resources outside of China’s control, and users like Hitachi (NYSE:HIT) will re-engineer products to reduce the rare earth content.
Likewise, a monopoly in potash will only go so far. If China truly sees its food security threatened by potash prices, the government will allocate resources towards finding alternative supplies. Moreover, it seems safe to assume that China would likewise devote resources towards alternative fertilizers or perhaps become even bigger customers for engineered crop seeds from DuPont (NYSE:DD) or Syngenta (NYSE:SYT) that require less fertilizer.
All in all, expect China to stomp its feet and make some noise, but for the ultimate fate of Potash to be a matter of the shareholders’ interests. Although there may be some risk of tit-for-tat retaliation if China sees this as a move to threaten its agricultural sector, the reality is that China understands the monopoly game as well as anyone and certainly understands the logic of BHP’s efforts to do this deal. (For more, see Investing In China.)
Does this somehow even the playing field re: China’s monopoly or whatever you call it with reference to the trace minerals which are required for our “green initiative?”
If you want fertislizer, go to the Western Sahara.
Oops! Once again, I posted a question before reading all of the replies. Please excuse. I’m old. :)
If Western civilization still has two active brain cells among it’s entire population it will find a way to keep control over some critical elements China needs!
Look at what China is doing to us regards Rare Earth Elements (REE’s).
It does, but they are made in China.
OK, I’ll change my post name to: OneHungLow
Monroe-doctrine it already!
Jeesh!!
This is bad — Potash Corp makes a quarter of the world’s needs of Potash. If the Chinese control it, the American farmer will be affected as will farmers everywhere else in the world.
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