China consumes one-fifth of the world's annual copper and a quarter of its zinc output.
The same story applies to metal after metal. China is just as starved for oil and gas.
Canada has all those resources and more and there are plenty of companies for the Chinese to choose from.
CHINA DEAL NOT BENEFICIAL
There is nothing stopping Canada from blocking the Noranda takeover.
Unlike France and Germany, Canada doesn't have a bilateral treaty with China.
We could refuse the takeover and not break specific rules.
The Industry Minister can stop the Noranda deal from moving forward
if the deal is not beneficial to Canada. He can halt the takeover
although it appears as if the goverment is in favour of the Minmetals proposal.
Shopping the globe for resources
China desperately needs fuel to feed its red-hot economy. Is Canada its warehouse?
by Jason Kirby, Financial Post, Oct 23, 2004
The move by state-run China Minmetals to buy Noranda Inc. is stoking fears of an all-out takeover of Canada's resource sector and a call for investment restrictions to be imposed on China. The country's super-heated growth has caught the world off guard and put acute demands on the country's resources. As a result, China is forced to look abroad to oil and mineral rich countries like Canada to feed its needs. "This is just the beginning," says David Hale, a noted China consultant and fund advisor in Chicago. "They're desperate for raw materials and they're prepared to pay a high price to get those materials. China will be looking for more resources in Canada." Indeed, China's foreign minister has said the government is pressing companies there to make investments in Canada's resource sector.
China's demand for raw materials isn't a new story, but it bears repeating. The country consumes one-fifth of the world's annual copper production and as much as a quarter of zinc output. Industry analysts say the world has about 15 years of copper reserves and even less of zinc. The same story applies to metal after metal, driving commodity prices up 30% to 40% in the past year alone. China is just as starved for oil and gas to fuel its industries and cars. According to research by international fund manager Marc Faber, each Chinese consumes the equivalent of 1.7 barrels of oil a year, compared to more than 25 barrels a year in the United States. If demand in China's coastal region -- about one-third of the country -- rises to the per-capita levels of Japan and South Korea, Saudi Arabia's production would be consumed twice over.
But nowhere has China's resource hunger been more immediately felt than in Canada, thanks to Minmetals' controversial $6-billion bid for Noranda, one of the world's largest nickel and zinc miners, and by extension its 59% stake in Falconbridge Ltd. Canada, of course, has all those resources and more. And there are plenty of companies for the Chinese to choose from. Among names some analysts pass around as possibly attractive to the Chinese are Inmet Mining Corp., which produces copper and zinc, and Teck Cominco Ltd., which mines those same metals plus coal and gold.
Not since the 1970s when the Trudeau Liberals were faced with U.S. companies buying up huge swaths of Canada's oilpatch, has there been as much debate over whether to protect Canadian resources. In 1973 the threat of foreign takeovers was enough to prompt the Liberal minority government to create the Foreign Investment Review Agency. For a decade it put limits on foreign investments and raised the ire of American politicians and businesses that wanted to invest in Canada. Brian Mulroney's Progressive Conservative government closed the agency in 1984, but to listen to some opponents of China's interest in Canada's resource sector today, such drastic measures are needed again. Will Paul Martin follow in Trudeau's footsteps and slap limits on Chinese investment in Canada? The debate is already percolating within senior ranks of government. Senior federal civil servants such as Garry Nash, assistant deputy minister at Natural Resources Canada, argue World Trade Organization rules prevent Canada from treating China differently from any other trading partner. The WTO rules, "hang over everything we do", Mr. Nash says.
However, some trade experts think there is nothing stopping Canada from blocking the Noranda takeover. "Unlike France and Germany, Canada doesn't have a bilateral treaty with China," says Toronto trade lawyer Barry Appleton, whose clients include Canadian investors in China. "We could refuse the takeover and not break specific rules." That's the issue before Industry Minister David Emerson, who can stop the Noranda deal from moving forward. If Mr. Emerson decides the deal is not beneficial to Canada, he can halt the takeover, although it appears as if the goverment is in favour of the Minmetals proposal.
The government is in a tough spot. If it grants China unfettered access to the nation's resources, will the Chinese continue to invest in the operations or simply bleed them dry? On the other hand, if Canada turns China away, it could sour trade relations with the emerging economic powerhouse. "From the standpoint of Canada, there's no real valid reason not to do the deal," says Mr. Hale in Chicago. "There's no threat to Canada's security or economic interests. It's really a straightforward economic transaction." But it's one that will have implications for decades to come.
PM LAUDS CHINA TAKING OVER and CHINADA'S SOVIETIZATION and CHINESE TAKE-OVER and MCCARTHY'S UN THOUGHTS
CANADA'S RED TRUDEAU and MULRONEY BALONEY and AMERICAS MORONS
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