It is not just the auto industry that is feeling the pinch of the economy, it seems that the mining industry is feeling it as well.
BIG mining companies have suffered an astounding reversal of fortunes in the past few months. As boom has turned to gloom, commodity prices have slumped, leaving mining firms with painful decisions to make. Rio Tinto is the latest to suffer. On Monday February 2nd the Anglo-Australian mining giant was forced to confirm press speculation, acknowledging that it is in talks with Chinalco, a state-owned Chinese aluminium maker. The Chinese firm may agree to a deal to help to alleviate Rio’s debts which were taken on before the credit crunch led to a foundering world economy.
Rio’s debt pile of some $40 billion was mostly run-up through its purchase of Alcan, a Canadian aluminium firm, in 2007. Around $9 billion is due later this year, and refinancing will be a tricky proposition given the parlous state of debt markets. Another $10 billion must be repaid in 2010. Rio has started a firesale of assets: it raised $1.6 billion last week by selling iron ore and potash businesses in Brazil and Argentina to Vale, a Brazilian rival. But prices are depressed and making a sale is not always possible—Rio has still not managed to offload Alcan’s packaging business, although it is reportedly in talks with a potential buyer.
via Rio Tinto, deeply indebted, seeks investment from China The Economist.
More fall out from a concept floated by the Democrats, that was based entirely upon risk. Thank you Bill Cinton for ruining America. 🙄