21 Century Business report on possibility of a counter offer by Chinese steel makers has evoked instant reactions from various stake holders. Baosteel is expected by analysts to require partners in putting together a bid for the much larger Rio Tinto and reports last week said that China's leading steelmakers could be putting together a bid consortium.
Separately, China Business reported the Chinese steelmakers had secretly gathered in Beijing November 26th 2007 to discuss about countering BHP takeover proposal for Rio, which was also attended by officials from the State Council and State owned Asset Supervision and Administration Commission. The consensus made at the meeting is reportedly submitted to the SASAC and Ministry of Commerce, with no response yielded yet. As per repots, Mr Qi Xiangdong deputy chairman of China Iron and Steel Association confirmed that its members have held talks.
But Mr Chen Bin director of the industrial department of the National Development and Reform Commission, which supervises China's steel industry, said the commission is not involved in any Rio Tinto bid.
XFN-ASIA reported that Laiwu Steel said that it has received no formal communication from Baoshan Iron & Steel Co Ltd to join a reported bid for Rio Tinto. A Laiwu spokesman told XFN-Asia that “The reported bid is a good idea. But we have not been formally contacted by anyone at Baosteel to participate in any joint bid for Rio Tinto. I suspect it is all just at the hypothetical stage right now.”
Mr Chen Hanyu a director at the resources office of Shougang Corp in an interview with Bloomberg confirmed that “It is an issue being discussed by top level officials. A few of the biggest steelmakers in China and the central government may team up for the bid.”
Mr Chen's boss Tan Yixin GM of China Shougang International Trade and Engineering Corp Mineral Import and Export Company told Reuters that Mr Chen has been misquoted. He said "Chen Hanyu is not authorized to speak to the press like that. Mr Chen Hanyu has said he did not say these things to Bloomberg.” He added that "Shougang is not involved in and will not be involved in any joint bid for Rio Tinto Group. The company is not aware of any joint bid among steelmakers in China for Rio Tinto Group."
Chinese steelmakers, who are the world's largest buyers of iron ore, have previously expressed concern about BHP Billiton's USD 150 billion offer for rival Rio, saying a combined entity would have too much pricing power.
