Two of the world's top three leading mining companies are headed toward a merger that "would be but an opening act in a world-wide competition for resources for which there are few precedents," reports Dennis K. Berman of The Wall Street Journal.
BHP Billiton has put in a $132 billion unsolicited offer for Rio Tinto, and together the Anglo-Australian companies "would have a firm hand in iron ore, coal and copper, pulled across 154 separate mines from Madagascar to Michigan," Berman writes. That has implications for rural areas, where extractive industries do almost all their extracting.
If the offer is accepted, the resulting $350 billion company would only trail Exxon Mobil in size and would have "nearly double the profit of Microsoft and 45 times the profit of Yahoo," Berman writes. "It would create a company so geographically dispersed, and so politically influential that it would become almost a country unto itself."
The new company would have control over 40 percent of the world's seaborne iron ore and a third of the world's uranium. The availability of natural resources — especially ironore — is a major concern for China and its booming growth."Access to raw materials is probably the biggest thing facing China now, in terms of its economy," Doug Guthrie, professor of management at New York University's Stern School who studies Chinese business, told Berman. "We put focus on the trade deficit and goods at Wal-Mart. We often forget these issues are going to have a bigger impact on people." (Read more)
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