Shougang Hierro strike approaching its end as an agreement is reached

Progress is being made down in Peru between Chinese miner Shougang Hierro and the workers who have been protesting for weeks now against unfair wages and treatment by their Chinese owners. Nothing new… for the record, there are few international companies which invest in the Peruvian mining industry and thereafter roll out the red carpet for their workers. It’s mining, not investment banking…

The 1200 striking workers have begin working again according to manager Julio Ortiz, who said they returned to work because the company said it would commit to some of the workers demands.

Currently workers earn a salary of 1,770 ($614) Peruvian soles a month and the company has released a statement saying Shougang is willing to raise the daily salary by 5.50, or 165 soles a month—bringing the new total to 1935 soles ($677).

According to this Reuters article (in Spanish), Shougang earned a solid 417 million soles last year ($144.7 million dollars), a increase over the year before of 50%.

All in all, it seems Shougang won this battle… CSA will continue to bring you updates on this matter in the weeks to come.

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China’s Sinohydro to build hydroelectric project in Ecuador

Ecuadorian President Rafael Correa signed a contract today with Chinese company Sinohydro Corportation.  The company will be in charge of building the Coca-Codo-Sinclair hydroelectric project along Ecuador’s Amazon river.

The project is valued at $2 billion usd and will become Ecuadors largest hydroelectric facility.  Once completed, the hydroelectric facility will be capable of meeting 75% of the country’s total power supply, reports Xinhua.

According to this Xinhua article, the Export-Import Bank of China will cover 85 percent of the project’s total cost, with the remaining 15 percent covered by the Ecuadorian government.

President Correa said that “the launching of this project would be a historical event as it represents one of the biggest foreign investments in Ecuador and will create about 4,000 direct jobs and 15,000 indirect jobs in Ecuador.”

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Chile, Copper and BHP Billiton

Newswire / CSA Commentary —

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Chile copper output rises 7.8%

Copper output in Chile, the world’s biggest producer, rose 7.8% in August from a year earlier after state-owned Codelco and BHP Billiton boosted production, the government said.

Output increased to 459,823t from 426,689t a year earlier, the country’s national statistics agency said in a statement distributed in Santiago today.

Click here to access the complete article

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Likewise, as this next article exhibits, BHP’s full year profit forecast may be substantially larger than previously thought…

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BHPB profit forecast raised 22% on copper, RBS says

BHPB’s profit after tax may be US$10.68 billion in the year ending June 30, analysts led by Warren Edney said in a report dated yesterday. Profit may be US$14.9 billion in the year ending June 30, 2011, up 11% on an earlier forecast, he said.

Click here to access the complete article

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However, we’ll see how this all plays out when BHP’s workers meet next week to vote a potential strike

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BHPB Chile copper workers to vote on strike next week

BHP Billiton workers at the Spence copper mine in Chile will vote whether to go on strike next week after rejecting the company’s latest pay offer, a union official said…

Workers may start a strike on October 3 for an indefinite period if they fail to get more of a pay increase, Mr Ramirez said yesterday…

Click here to access the complete article

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All while yet another big player in the copper sector ups their 2010 forecast of avg copper prices

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Chile’s Sonami sees 2010 avg copper price $2.50/lb

Chile’s second biggest mining association, Sonami, expects the average price of copper to rise by up to 19 percent next year, which might encourage the continuation of more copper projects in the South American nation, its president told Reuters on Monday.

The average copper price may rise to $2.50 per lb in 2010 from an average of $2.10 to $2.30 this year, Sonami’s Alfredo Ovalle said in an interview at a forum in Santiago.

Click here to access the complete article

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RBS forecasts copper prices may hit a new record by 2013

Copper is likely to reach a new high by 2013 as the market moves into a deficit and further tightens in the coming years, RBS Global Banking & Markets said on Thursday.

“Copper remains our most favoured base metal,” RBS said in a research note, in which it forecast an average cash copper price of $9,000 a tonne by 2013, a rise of more than 46% from the current cash MCU0 price on the London Metal Exchange. Benchmark three-month copper price MCU3 hit a record high of $8,940 a tonne in July 2008 and traded at $6,115 a tonne on Thursday.

“Copper’s demand prospects are not among the best but we believe copper producers will have the most difficulty in keeping up with growing demand. We forecast an underlying market deficit by 2011 and that by 2013 it will be fast approaching pre-recession tightness,” the bank said.

Copper, used extensively in construction, has doubled in price since the beginning of the year on the back of restocking from China, the world’s top consumer of the metal and on expectations of a recovery in the global growth.

…

Click here to access the full article from Mineweb

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World Bank discusses investing in Africa with China Investment Fund

BEIJING — World Bank President Robert Zoellick said he is talking to Chinese government officials about cooperating on investments in Africa, which he said could help boost the continent’s economic growth.

Mr. Zoellick told reporters Wednesday during a visit to the Chinese capital that China Investment Corp., the nation’s sovereign-wealth fund, has expressed interest in investing in the World Bank’s recently launched asset management company, which invests private-sector funds into places like sub-Saharan Africa and Latin America.

World Bank President Robert Zoellick
On Wed, stated he will press Group of 20
for more aid to developing countries [WSJ]

“CIC expressed interest in this as a commercial investment vehicle, but obviously there is no decision yet on their part,” Mr. Zoellick said. Other sovereign-wealth funds and pension funds are also interested in the new investment vehicle, he said, which manages some $4 billion in funds.

Click here to read J.R. Wu and Andrew Batson’s complete article at the WSJ

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Newswire: South America

[Brazil] — Brazil strengthens state control over offshore oil reserves — Xinhua
Brazil announced on Monday new oil exploration rules to increase state control over its recently discovered offshore oil reserves.

Under the plan, the state-owned oil and gas giant Petrobras will be the sole operator of the new oil reserves. It will also have a minimum 30-percent stake in all future projects in the pre-salt layer fields.

Brazil Tries to Maximize Offshore Oil Bonanza— Latin America Herald Tribine
Brazilian President Lula revealed the government’s plans to make Brazil one of the top 10 oil producers in the world and develop what he believes are the world’s 9th largest oil reserves, but his announcement of increased state control and further equity sales shook markets, causing Petrobras to lose $7 billion in value in one day.

Petrobras Loses $7 Billion Value as Lula Seeks Stake — Bloomberg
Brazilian President Luiz Inacio Lula da Silva’s plans for the development of the country’s offshore oil fields stripped Petroleo Brasileiro SA investors of $7 billion in a day.

The proposal, announced yesterday, may allow the state to boost its stake in the company and ensure most income from oil exploration “stays in the hands of our people,” Lula said at a press conference in Brasilia. Petrobras, as the Rio de Janeiro- based company is known, led the Bovespa stock index to the biggest drop in the Americas yesterday after the announcement.

[Venezuela] — Chavez Says Venezuela Will Continue Oil Exports to U.S. — Latin America Herald Tribine
Venezuelan President Hugo Chavez said that his country will continue exporting oil to the United States because it is in the Andean nation’s interest.

Chavez said in a statement published in the Lima daily El Comercio that “many people don’t know” that Venezuelan state oil giant PDVSA, through its Citgo subsidiary, has seven large refineries and more than 10,000 service stations on U.S. soil.

“Venezuela can’t take a decision against ourselves. We send the oil to our refineries and to our distribution systems in the United States,” he said.

Caracas Stock Market Up 3% for the Week — Up 41% for the Year — Latin America Herald Tribine
The Caracas Stock Index rose 3.16% for the week to close at 49,507 mostly on the back on the continued rise of Sivensa shares on continued optimism over the buyback of its shares to be considered at its shareholders meeting next week. Sivensa shares rose sharply, closing at Bs. 16.5 for a 37.5% rise.

[Peru] — Two Wounded in Rebel Attack, Peruvian TV Reports — Latin American Herald Tribine
At least two soldiers were wounded in an attack apparently mounted by Shining Path guerrillas Monday against a counterinsurgency base in central Peru’s Junin province, Canal N television reported.

The guerrillas opened fire around 3:30 a.m. on the Jose Olaya base in the strife-torn Valley of the Apurimac and Ene rivers, known as the VRAE region, Canal N said.

[Bolivia] — Morales Named “World Hero of Mother Earth” by UN General Assembly— Latin America Herald Tribine
The president of the United Nations General Assembly, Rev. Miguel D’Escoto Brockmann, on Saturday declared Bolivian President Evo Morales as “World Hero of Mother Earth” in a ceremony at the presidential palace in this capital.

With a medal and a parchment scroll, the General Assembly of the United Nations Organization named Morales “the maximum exponent and paradigm of love for Mother Earth” in the resolution for his decoration that was read during the ceremony.

Bolivia Cries Foul Over Peru Plans for Drilling in Titicaca — Latin America Herald Tribine
Bolivian President Evo Morales’ government will present a formal complaint to Peru over its plans to drill for oil in Lake Titicaca without consulting La Paz, state-run news agency ABI reported.

Hydrocarbons Minister Oscar Coca sent Bolivia’s Foreign Ministry a note requesting that a formal complaint be made since the body of water straddles the border between the two nations, ABI said.

“Since Lake Titicaca is a bi-national area, it’s obvious that there can’t be unilateral actions” and therefore the matter requires a diplomatic solution, Coca said.

[Cuba] — Cuba endeavors to raise farm output amid economic downturn — Xinhua
Pressured by a global economic crisis and a stern U.S. economic blockade that has lasted nearly half a century, Cuba is actively seeking ways to boost its agricultural production.

The measures include turning over land close to cities to residents to plow, replacing fuel-burning tractors with oxen, redistributing fallow land and raising the prices of state-regulated farm products.

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Argentina could potentially attract $10 billion to its stock market if restrictions are lifted, reports Bloomberg

Argentina’s stock exchange called on the government to lift capital controls that caused it to become the only major Latin America market classified as “frontier,” adding the move may help lure $10 billion in foreign investment.

A requirement for international investors to deposit 30 percent of what they put in Argentina with the central bank for a year “have stopped making sense,” Adelmo Gabbi, the Buenos Aires stock exchange’s chairman, said yesterday in a speech.

Capital controls prompted MSCI Inc. to remove Argentina from its benchmark emerging-market index in June, assigning it the so-called frontier status along with the world’s least developed markets. The controls have helped Argentina avoid volatility, said President Cristina Fernandez de Kirchner.

Argentina’s stock exchange, Buenos Aires
Image courtesy of Business Week

“We have to seek a rule so that the inflow of funds won’t be speculative,” she said, without elaborating.

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“The deposit requirement was imposed in 2005 and was one of the forces that allowed us to confront the brutal volatility of the markets during the crisis,” Fernandez responded yesterday in a speech at the Buenos Aires stock exchange.

Fernandez’s husband and predecessor Nestor Kirchner imposed deposit requirement in order to discourage speculators from investing in local markets after the country restructured about $104 billion in bonds…

Click here to access the full article from Bloomberg

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Sinopec’s profit soars; announces plans to boost oversea expansion

Sinopec’s (a.k.a China Petroleum & Chemical Corp.) net income rose at least tenfold to 22 billion yuan ($3.22 billion usd) in the second quarter according to this Bloomberg article.

The company has also announced it is planning a “rapid” overseas expansion in order to secure energy supply adequate to feed Chinese demand.

[Sinopec I passed on a bus ride to Shanxi, October – 2006]

The announcement, along with the company’s record gains in profit come as other global giants in the energy industry such as Royal Dutch Shell and Exxon Mobil have seen their earnings decline as prices plummeted and demand waned when the global slowdown ensued at the end of 2008.

According to Bloomberg, Sinopec supplies 80% of China’s fuel needs and is China’s largest refiner of crude oil. The company is looking for new foreign partners, expand its refining capacity and reduce operational costs. The company expects demand will remain strong in China and that oil prices will continue to rise throughout the second half of the year.

Here are a few highlights from the Bloomberg article, “Sinopec to Boost Expansion Abroad After Profit Surges to Record,” which you can access in full by clicking here.

“Sinopec’s main business is refining and it needs to increase its oil reserves and reduce its reliance on other oil producers,” said Larry Grace, an independent oil analyst based in Hong Kong. “There’s a government directive to increase overseas oil and gas assets.”

…

Sinopec gets almost all its revenue from refining and the sale and distribution of fuels. Oil production accounted for just over 2 percent of sales, according to its 2008 annual report. The company imports about 80 percent of the crude it processes.

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Su said the company will accelerate its “go global” strategy.

Parent company China Petrochemical Corp. said on Aug. 18 it had concluded the C$8.3 billion ($7.7 billion) acquisition of Addax Petroleum Corp. to secure reserves in Iraq and Africa. China Petrochemical has assets in Russia, Angola, Ecuador, Australia, Canada, Kazakhstan and Myanmar.

Sinopec’s parent completed the purchase of Tanganyika Oil Co. for about $1.8 billion in December. Vancouver-based Tanganyika holds stakes in two Syrian production-sharing agreements covering the Oudeh and Tishrine/Sheikh Mansour blocks after expanding from Tanzania in 1996.

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Newswire: South-South / Emerging Market Cooperation

[China – ASEAN] – China to Boost Cooperation With Asean on Investments – Bloomberg

China wants to boost cooperation with members of the Association of Southeast Asian Nations to develop trade and increase investment, said Chinese Commerce Minister Chen Deming.

[ASEAN] – Five Asean Nations May Form Rice-Trade Body, Thai Official Says – Bloomberg

Five Southeast Asian nations may set up a rice-trade association next year to cooperate in stabilizing rice prices, a Thai official said.

Thailand, Vietnam, Cambodia, Laos and Myanmar will also cooperate on other issues related to food security and production, said Chiya Yimvilai, a spokesman at a meeting of Asean economic ministers in Bangkok. The countries would also work together on developing rice products, he said.

[Venezuela – Russia] – PDVSA, Russian Group to Start $30 Billion Oil Venture – Bloomberg

Petroleos de Venezuela SA and a group of Russian oil companies plan to spend $30 billion on a joint venture in Venezuela’s Orinoco region.

The 40-year venture will seek to produce crude in the Junin 6 area and may expand to other Orinoco blocks, Russian Deputy Prime Minister Igor Sechin told reporters in St. Petersburg today after meeting with Venezuelan Vice President Ramon Carrizalez. Russian investors will include OAO Gazprom, OAO Rosneft, OAO Lukoil, TNK-BP and OAO Surgutneftegaz. The venture will be signed “in the coming months,” Sechin said.

[Mexico – Uruguay] – Mexico/Uruguay sign strategic association accord and advance trade – MecroPress

Mexico president Felipe Calderón and Uruguay’s Tabare Vazquez signed on Friday in Montevideo a Strategic Association accord to strengthen political dialogue and bilateral trade relations in the framework of the 2004 free trade agreement.

[Mexico – Colombia – Venezuela – Ecuador] – Mexico offers to mediate between Colombia and Venezuela and Ecuador – MecroPress
Mexican president Felipe Calderón on an official visit to Colombia offered his country’s mediation in the conflict between Bogotá and neighbouring Ecuador and Venezuela.

[Peru – Brazil] – Brazilian President to visit Peru to strengthen strategic alliance – Andina
The next arrival to Lima of Brazilian President Luiz Inacio Lula da Silva will contribute to create a new strategic alliance to face Asian markets when signing several trade agreements, the President of Peru-Brazil Integration Chamber Miguel Vega Alvear.

“The arrival of Brazilian President will strengthen the progress achieved up to now in this Peru-Brazil strategic alliance and it will create a new stage in which both countries can face Asia-Pacific markets,”

a2a_linkname=”Newswire – South South Emerging Market Cooperation”;a2a_linkurl=”http://chinasouthamerica.blogspot.com/2009/08/newswire-south-south-emerging-market.html”;

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Asian smelters to benefit from Doe Run Peru shutdown

Doe Run Peru shut down its lead and zinc smelter on June 2 after the company ran out of money and credit, therefore rendering it unable to buy the raw materials being produced at near by mines.

According to this Bloomberg article, guess who’s stands poised to benefit from this? You guessed it Asia’s smelters, who despite the global slow down remain hungry for
more.

Alex Emery in Lima down in Lima writes:

Glencore International AG, the world’s biggest commodities trader, and Trafigura Beheer BV are benefiting as suppliers of Doe Run Peru’s shut lead and zinc smelter seek international traders to sell their concentrates.

“We’re looking for more clients abroad, particularly Asian smelters,” to buy the extra production, Glencore’s Peruvian manager Fernando Cafe said in a July 3 interview.

Cia. De Minas Buenaventura SA, Pan American Silver Corp. and about 30 other miners in the central Peruvian Andes have had to seek alternative buyers after the Renco Group Inc. unit smelter ran out of cash and halted all operations on June 2…

To read the complete article please visit the complete Bloomberg article.

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