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Jp Morgan Warns Australian Mining Companies

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http://www.theaustralian.news.com.au/busin...7-36418,00.html

Miners warned to brace for pain as demand slows

Sarah-Jane Tasker | September 12, 2009

Article from: The Australian

AUSTRALIAN miners should brace for further pain next year and not bank on being pulled along by China's robust economy, as the Asian giant's hunger for commodities begins to slow.

Michael Jansen, JPMorgan's head of commodities research, said the potential for disappointment on China's increasing demand aiding a full recovery in the mining sector was "huge".

"A large part of the capacity utilisation recovery in China is built on access to cheap money and widely available money, and that isn't going to be the situation throughout 2010," he said in an exclusive interview with The Weekend Australian.

"Next year, the ability to finance all that importing and general pipeline activity is going to be a lot less evident."

Mr Jansen, on a week-long tour of Australia from his London base, said that while the rest of this year and possibly the first quarter of next year would remain positive for the resources sector, 2010 would prove a strain.

"If I was an exporter of bulk commodities to China I would be worried about 2010 more than I would be worried about the rest of this year," he said.

"There is a bit of momentum in Chinese activity for the rest of this year, which is hugely underpinned by the credit cycle in China. The chances are close to 100 per cent that people are surprised positively by activity in the West through to the end of the year, but then the prospect is that things could look nasty again from the second quarter (next year) onwards."

The sector was hit hard by the global downturn, which caused banks to close their doors to funding, compounded by a sharp fall in commodity prices and a drop in demand.

Miners, from the juniors to the majors, were forced to cut staff, curtail production and aggressively look for new ways to cut costs, but not every company managed successfully and there were a few casualties during the downturn.

But the long-term view on China has driven a recent buzz of activity in the sector, with the economic powerhouse continuing its push into Australia's rich resources.

Mr Jansen warned that although there was a spike in activity, the sector would spend the next two years getting back to where it was in terms of the 2007 levels of global industrial activity.

"Commodities are not just about the growth rates," he said. "It is about the actual physical level of supply versus demand and that is where things look a lot less rosy.

"I can see real problems in the supply side because the capacity is hugely geared towards a demand level which we won't see for some time."

Mr Jansen said most miners understood that the recovery had a long way to go, and added that many were reluctant to bring idled production back onstream.

"There has to be a lot of discipline, which will probably fray going forward," he said.

The sectors tipped to struggle in the recovery process will be those where China has excess capacity.

"China is seeing somewhat of a real demand recovery, but in the first half of the year a large percentage of that was also re-stocking," Mr Jansen said.

"Now China is basically up to its neck in physical materials and the end-user demand is catching up but not nearly quick enough.

"What we have really got is the West is pulling behind the China story but China has a lot of physical metals and they might start thinking they can export some of it."

Potential for surplus would be in the commodities where China had increasingly dominated from a smelting and milling perspective, Mr Jansen said, adding that steel, aluminium and potentially zinc and lead were likely to be affected.

The general trend in the markets was confidence, but not "over-the-top confidence".

Aussie housing market recovery? Aussie dollar to stay high?

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http://www.theaustralian.news.com.au/busin...7-36418,00.html

Miners warned to brace for pain as demand slows

Sarah-Jane Tasker | September 12, 2009

Article from: The Australian

Aussie housing market recovery? Aussie dollar to stay high?

While rates are high in Oz, then the Oz dollar will remain high, "carry trade", as for house prices in Oz, well Ozzy's for me are the most un-educated morans i have ever met? Lazy, but love a "do nothing buck" so maybe it is different over in the land of Oz? :lol:

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While rates are high in Oz, then the Oz dollar will remain high, "carry trade", as for house prices in Oz, well Ozzy's for me are the most un-educated morans i have ever met? Lazy, but love a "do nothing buck" so maybe it is different over in the land of Oz? :lol:

Ah the endless whining twitter of yet another whinging pom :rolleyes:

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Can't be @rsed to dig the link out, but the Aussie PM had the bottle to stand up to the Chinese and veto the takeover of one of the (steel ?) miners.

Xstrata or BHP Billiton or owt like that. But it was a big strategic company.

I'm sure he didn't need some suit from JPMC 'advising' them.

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Game playing.

http://www.chinadaily.com.cn/world/2009-06...ent_8293563.htm

JPMorgan plays the field in Rio-Chinalco saga

(Agencies)

Updated: 2009-06-17 11:32

Comments(0) PrintMail

Opportunistic or a testament to its strong ties, balance sheet and global M&A profile?

Of the dozen or so banks involved in miner Rio Tinto's year-long takeover saga, only JPMorgan has served three different roles to two separate clients.

Related readings:

JPMorgan plays the field in Rio-Chinalco sagaRio Tinto-Chinalco $19.5B deal dead

JPMorgan plays the field in Rio-Chinalco sagaAustralia ties OK despite Rio scrap

JPMorgan plays the field in Rio-Chinalco sagaRio deal a lesson in M&A strategy

JPMorgan plays the field in Rio-Chinalco sagaRio accused of carbon deception

JPMorgan plays the field in Rio-Chinalco sagaRio Tinto, BHP deal 'monopolistic'

JPMorgan showed its muscle as it switched sides during the Rio deal, but also raised some eyebrows.

The bank's swift move from advising Chinese client Chinalco on its $19.5 billion offer for Rio assets and a doubling of its stake in the miner to helping Rio underwrite a bumper rights issue has prompted rival bankers to query JPMorgan's loyalties.

The New York bank, Rio's corporate broker in London via affiliate JPMorgan Cazenove, advised the Anglo-Australian miner in fending off a hostile bid by rival BHP Billiton that collapsed late last year.

It then gained a last-minute advisory role for Aluminum Corp of China (Chinalco), helping the metals company as it sought to buy into Rio Tinto.

Rio eventually ditched that plan, opting instead for a $15.2 billion rights issue and an iron ore joint venture with BHP. One of the underwriters mandated for the rights offer: JPMorgan.

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While rates are high in Oz, then the Oz dollar will remain high, "carry trade", as for house prices in Oz, well Ozzy's for me are the most un-educated morans i have ever met? Lazy, but love a "do nothing buck" so maybe it is different over in the land of Oz? :lol:

10 out of 10 for self-parody, Panda.

Do keep it up.

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Game playing.

http://www.chinadaily.com.cn/world/2009-06...ent_8293563.htm

JPMorgan plays the field in Rio-Chinalco saga

(Agencies)

Updated: 2009-06-17 11:32

Comments(0) PrintMail

Opportunistic or a testament to its strong ties, balance sheet and global M&A profile?

Of the dozen or so banks involved in miner Rio Tinto's year-long takeover saga, only JPMorgan has served three different roles to two separate clients.

Related readings:

JPMorgan plays the field in Rio-Chinalco sagaRio Tinto-Chinalco $19.5B deal dead

JPMorgan plays the field in Rio-Chinalco sagaAustralia ties OK despite Rio scrap

JPMorgan plays the field in Rio-Chinalco sagaRio deal a lesson in M&A strategy

JPMorgan plays the field in Rio-Chinalco sagaRio accused of carbon deception

JPMorgan plays the field in Rio-Chinalco sagaRio Tinto, BHP deal 'monopolistic'

JPMorgan showed its muscle as it switched sides during the Rio deal, but also raised some eyebrows.

The bank's swift move from advising Chinese client Chinalco on its $19.5 billion offer for Rio assets and a doubling of its stake in the miner to helping Rio underwrite a bumper rights issue has prompted rival bankers to query JPMorgan's loyalties.

The New York bank, Rio's corporate broker in London via affiliate JPMorgan Cazenove, advised the Anglo-Australian miner in fending off a hostile bid by rival BHP Billiton that collapsed late last year.

It then gained a last-minute advisory role for Aluminum Corp of China (Chinalco), helping the metals company as it sought to buy into Rio Tinto.

Rio eventually ditched that plan, opting instead for a $15.2 billion rights issue and an iron ore joint venture with BHP. One of the underwriters mandated for the rights offer: JPMorgan.

JPM have a ginormous commodities hedge book too.

The original article reads like something from early 2008: weren't China's industrial manufacturing output figures (up 11%) out this week? I'm sure there's a link somewhere.

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Can't be @rsed to dig the link out, but the Aussie PM had the bottle to stand up to the Chinese and veto the takeover of one of the (steel ?) miners.

Xstrata or BHP Billiton or owt like that. But it was a big strategic company.

I'm sure he didn't need some suit from JPMC 'advising' them.

The Qz PM is an Ex Employe of.........Goldman Sacs..........He was acting on instructions

Mike

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While rates are high in Oz, then the Oz dollar will remain high, "carry trade", as for house prices in Oz, well Ozzy's for me are the most un-educated morans i have ever met? Lazy, but love a "do nothing buck" so maybe it is different over in the land of Oz? :lol:

what is a moran?

did you mean moron?

mo·ron <script>play_w2("M0425500") (môrprime.gifobreve.gifnlprime.gif, momacr.gifrprime.gif-)n.1. A stupid person; a dolt.2. Psychology A person of mild mental retardation having a mental age of from 7 to 12 years and generally having communication and social skills enabling some degree of academic or vocational education. The term belongs to a classification system no longer in use and is now considered offensive.

it looks like you are the uneducated moron

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The Qz PM is an Ex Employe of.........Goldman Sacs..........He was acting on instructions

Mike

News to me (if by Qz you mean Oz = Australian). If so, I suspect you're confusing Rudd with the opposition leader, Turnbull.

Edit for clarity

Edited by aussieboy

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what is a moran?

did you mean moron?

it looks like you are the uneducated moron

could be moran, a soon to be circumsised Massai warrior:

Every 15 years or so, a new and individually named generation of Morans or Il-murran (warriors) will be initiated. This involves most boys between 12 and 25, who have reached puberty and are not part of the previous age-set. One rite of passage from boyhood to the status of junior warrior is a painful circumcision ceremony, which is performed without anaesthetic. This ritual is typically performed by the elders, who use a sharpened knife and makeshift cattle hide bandages for the procedure.

Now that’s and insult, bigoted and racist!

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Can't be @rsed to dig the link out, but the Aussie PM had the bottle to stand up to the Chinese and veto the takeover of one of the (steel ?) miners.

Xstrata or BHP Billiton or owt like that. But it was a big strategic company.

I'm sure he didn't need some suit from JPMC 'advising' them.

Wrong several times over:

- It was Rio Tinto.

- and there was no question of a takeover. Just chinalco making an investment and taking a stake. Like the arab stakes in Barclays, except that the alternative of the UK taxpayer wasn't on offer.

- This was in response to Rio Tinto's huge debt difficulties: they *needed* a "white knight", and solicited the deal with chinalco to bail them out.

Rio Tinto's management may have screwed up, and the aussies may have been verging on xenophobia. The chinese are the only party to come out of it smelling of roses, having made a deal to save a struggling company, then had it scuppered.

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Wrong several times over:

- It was Rio Tinto.

- and there was no question of a takeover. Just chinalco making an investment and taking a stake. Like the arab stakes in Barclays, except that the alternative of the UK taxpayer wasn't on offer.

- This was in response to Rio Tinto's huge debt difficulties: they *needed* a "white knight", and solicited the deal with chinalco to bail them out.

Rio Tinto's management may have screwed up, and the aussies may have been verging on xenophobia. The chinese are the only party to come out of it smelling of roses, having made a deal to save a struggling company, then had it scuppered.

In defence of Rockinghorse:

- He did say "or owt like that" which I think covers Rio

- The comparison with Barclays isn't fantastic: their major customer wasn't buying a stake. The stake Chinalco were looking at (15 /11%) would have given them influence and information.

- They didn't *need* a white knight in the end what with the equities market picking up and all.

- Smelling of roses... manure, perhaps. Have you been following the Sten Hu case? Great way to encourage free commerce with your partners.

Thing with Rudd is, any accusation of xenophobia particularly wrt China won't really stick, what with him

and all: hardly the mark of a xenophobe. Plus, the treasurer was dead set keen. The foreign investment board just did their thing by taking a view on what might happen when one of the country's biggest exports considers a transaction which would hand influenced to one its biggest customers.

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