Chinese Hungry for Canadian Assets
Montreal, Canada
If you can’t own them outright, then maybe buy a stake.
That’s the strategy currently in-play by the Chinese as they continue to devour natural resource assets worldwide, mainly in Africa, Australia, Latin America and Canada.
Last fall, Australia’s powerhouse mining concern, BHP Billiton (NYSE-BHP), tried to make a bid for Canada’s Potash Corporation (NYSE-POT). But the Saskatchewan government was adamant about keeping the company in Canadian hands and turned down the deal.
China’s tack is different as she seeks to enter joint partnerships without antagonizing foreign governments or states. The objective is to “make nice” and get to those resource assets at almost any price. And China can pay any price.
PetroChina International Investment Co. has agreed to pay $5.4 billion dollars in a natural gas joint-venture with Canada’s Encana Corporation (NYSE-ECA). The stock is up more than 7% in early trading in New York as the market votes “thumbs up” on the deal. That represents a 56% cumulative gain since CTA recommended the purchase of Encana in March of 2009.
The deal marks the single largest Chinese investment in Canadian energy assets and underscores the important of establishing strategic relationships in important energy projects for the world’s largest commodities importer.
Over the past 14 months, Chinese companies have invested more than $13 billion dollars in Canadian energy deals.
For Encana, the largest natural gas producer in Canada, the deal provides immediate financing and virtually unlimited future funding, if necessary, to develop Cutbank Ridge, a prized shale-gas region.
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