Jim Letourneau's Blog

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China Buying Oil, Iron Ore and Zinc

We note with great interest a series of transactions from China...

  • Chinalco to put $19.5 billion into debt-laden Rio Tinto.

  • $25-billion agreement with Russia's state-owned Rosneft/Transneft to supply China with nearly 10% of its current volume of annual oil imports for the next two decades.

  • China Minmetals offered to buy debt-laden Australian miner Oz Minerals for $1.7 billion.

  • The China Development Bank is negotiating with Brazil's state-run oil company Petrobras to extend a $10 billion line of credit in exchange for future oil supplies.

China is what matters to the global economy and they are committing some of their massive cash reserves to tie up long term supplies of commodities. This kind of buying will keep a floor under commodity prices.