Alcoa and Chinese Rival Buy 12% Stake in Rio Tinto - New York Times - 0 views
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SHANGHAI — The state-owned giant Aluminum Corporation of China and the Aluminum Corporation of America stunned analysts and investors Friday by buying a minority stake in Rio Tinto, the world’s third largest mining company.
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“The Chinese are probably the best capitalists that communism will ever have given birth to,” said Michelle Applebaum, head of an independent steel equity research firm in Chicago.
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Last year, China’s state-controlled sovereign wealth fund — another increasingly visible and controversial measure of the new wealth of the nation — invested in the private equity firm Blackstone. Later, it paid about $5 billion to buy a small stake in Morgan Stanley.
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Now, China appears to be making another bold play to capture the natural resources it needs to fuel its fast-growing economy.
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Most of the $14 billion came from Chinalco, which is ultimately controlled by the government in Beijing. Alcoa, which is based in Pittsburgh, contributed only about $1.2 billion to purchase the Rio stake.
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"We believe that the Chinese recognize that control will likely be elusive — if not impossible — and that ownership of its raw material resources is key to the future.”
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The statement, analysts say, was a hint that the two could team up with other companies or entities, possibly from China, to bid for all of Rio and wage a tough takeover battle with BHP, driving up the price of Rio shares.
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Neither Chinalco nor Alcoa have the cash or stock to make a $150 billion bid, analysts say. Shares of Alcoa are worth about $30 billion and Chinalco shares in China are worth about $50 billion.