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Foreign invesment fuels mining industry (12/04)

By IAN ROSS Acquisition talks between China Minmetal and Noranda may have fallen through, but some in the mining and mining supply sector view China’s interest in Canadian resource as the future of what is to come as China experiences economic growth
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By IAN ROSS

Acquisition talks between China Minmetal and Noranda may have fallen through, but some in the mining and mining supply sector view China’s interest in Canadian resource as the future of what is to come as China experiences economic growth that is rippling around the world.

Nickel and copper giant Noranda Inc. announced in mid-November it is no longer in exclusive talks with China Minmetals Corp., a state-run conglomerate, and is open to other offers.

The talks generated opposition from politicians, the labour movement and conservative media calling on the government to carefully review or block the takeover.

Canadian MPs were upset over China’s human rights record, which they say has benefited China Minmetals.

The state-owned China Minmetals, established in 1950, had revenues of more than $11.7 billion in 2003.

For some in the mining and supply sector, they feel many successful Canadian companies have made huge gains out of investing in other countries for

years and say it would be hypocritical to stop other countries from doing so in Canada.

Canadian Association of Mining Equipment and Services for Export (CAMESE) managing director Jon Baird viewed the acquistion as China’s way of entering the real world of mining.

“Don’t forget where the investors who built Sudbury came from (the U.S.),” Baird says. “Canada’s always needed this foreign investment to fuel the

mining industry.”

He sees an upside for Ontario mining suppliers if companies like Minmetal are looking to secure raw materials in Canada.

“They would need far more than Noranda is producing...and would invest in new exploration projects.

“The Chinese have their eyes on Canada. This (Noranda-Minmetal talks) is just one small example,” says Baird, who has made presentations to two

groups of Chinese government officials in the last few months.

“They’re coming over here to find out how we run things. There’s no question they need the resources.”

As a former mining supply exporter who has sold equipment to China in the 1970s, Baird admits it is not an easy market to work in, but China still

represents the world’s biggest mining market.

He says Canadian mining technology is “leaps and bounds” ahead of anything China has in terms of efficiencies, safety and being environmentally-friendly.

“We have something to offer to the Chinese with or without the purchase of Noranda.”

Ontario provides two-thirds of Canada’s capacity to supply the mining industry and Northern Ontario is an important part of the economy, Baird

says.

Goldcorp president Rob McEwen says Canada’s high tax rates and policies have put Canadian companies like Noranda in a position where they are

“wide open” for acquistion by international companies like Minmetals.

He says China needs to lock up the long-term supply of raw materials and with their lower tax rates, they have accumulated massive amounts of capital, leaving Canadian companies easy to pick up.

“It is part of what’s going on around the world...consolidation of economic interests,” McEwen says.

Brascan Corp., Noranda’s majority owner, has wanted to shed its resource-based companies for years to focus instead on property, financial services

and energy.




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