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Posts Tagged ‘Hong Kong’

Resourcehouse pulls IPO

June 6, 2011 Comments off

“Australian billionaire Clive Palmer shelved his fourth attempt in two years to take mining company Resourcehouse Ltd. public on Hong Kong’s stock exchange, saying in a statement that worsening global market conditions blocked its plan to raise as much as $3.6 billion.

The move disclosed Saturday marks a rare sour note in the hot Hong Kong IPO market. The Chinese city has been the world’s No. 1 market by money raised for the past two years and is poised for another strong performance this year amid China’s fast-growth and the market’s considerable liquidity.

Resourcehouse’s decision comes after concerns the debt problems in the euro zone and slower growth in China would take a toll on demand for commodities. But investors were also discouraged by the company’s weak financials, analysts said.”

Source: Wall Street Journal, June 5 2011

Observations:

  • Resourcehouse is trying to raise several billions of dollars to enable development of the China First Coal (Queensland) and China First Iron Ore (Western Australia) Projects, which should start production in 2014.
  • The company has partnered with various Chinese companies in offtake, logistics and development deals. Most important Chinese partners are Metallurgical Corporation of China Ltd. (MCC) and China Power International (CPI).

Overview of operations from corporate website

Implications:

  • The uncertain future of European government debts and the slowing growth of China are mentioned as the reasons to call of the IPO. Demand for the shares is insufficient to support the intended launch price. As the uncertainty about European government finances is expected to continue for several years and China is trying to stabilize growth at a rate lower than in the previous decade it is unlikely that Resourcehouse will be able to raise the $3bln it intended.
  • The company might partner in development with one of the other diversified miners active in Australia or with an additional Asian partner to raise the capital required.

©2011 | Wilfred Visser | thebusinessofmining.com

Vale plans Hong Kong share listing

September 24, 2010 Comments off

“Vale, the Brazilian mining giant, plans to list shares in Hong Kong as the company seeks closer ties with investors in China, the world’s largest net iron ore importer by volume and its biggest market by far. This is a coup for the city’s stock exchange, which faces fierce competition from Singapore and Shanghai and is trying to attract more non-Chinese businesses.

It has been particularly successful with resource companies, which have become increasingly reliant on China’s heavy demand for natural resources to power their growth. ‘Asia is the main market for our products and is becoming increasingly important,’ Vale said in a statement about the planned listing.”

Source: Financial Times, September 24, 2010

Observations:

  • The Hong Kong stock exchange (HKEx) has performed a role in the listing of Rusal, IRC and smaller mining companies. Other resources companies listed in Hong Kong are Sinopec, China Resources, China Coal, Chalco and PetroChina.
  • Vale has listings in Sao Paolo, New York, Madrid and at Euronext with a total market capitalization of $158bln on an enterprise value of $169bln.

Implications:

  • In the recent special on the “Top 10 Priorities for Vale’s CEO Roger Agnelli” on this site, strengthening the ties with China was identified as one of the top priorities. The share listing in Hong Kong set up not to raise more money for the company, which has a lot of cash already, but merely to improve contact with investors, clients and government in the Far East.
  • The company is currently buying back shares, signalling that M&A moves that would prevent BHP’s acquisition of PotashCorp are unlikely. Future share issuing might well be performed on the Hong Kong exchange as this would provide Chinese investors a change to improve ties with the company.

©2010 | Wilfred Visser | thebusinessofmining.com