The mining industry is about to be shaken by the emergence of a major Chinese player that is likely to do business very differently from the established, Western-owned miners, and dramatically affect metals markets.
State-owned Aluminum Corp of China, or Chinalco, is set to break onto the world stage after buying a stake in world No. 2 miner Rio Tinto (RIO.L: Quote, Profile, Research) (RIO.AX: Quote, Profile, Research) and is talking of further buys.
Analysts say it is only a matter of time before a Chinese major emerges to supply the huge and growing demand for industrialization in the world’s most populous country.
“Within the next year, perhaps even before that, we are sure that a Chinese controlled company will enter the top-10,” said Magnus Ericsson, senior partner at Stockholm-based consultancy Raw Materials Group payday loan.
The arrival of a top Chinese miner is likely to soften global metals prices as it should increase supply by rushing through riskier projects to feed its voracious appetite for raw materials.
Tight supply has kept base metals prices high in recent years with the London Metal Exchange three-month copper price MCU3 reaching a new peak of $8,820 a tonne last week.
China, as top metals consumer, is desperate to secure supply and a major acquisition is the only way to do this quickly.
“If we do see big Chinese investment in projects the rest of the world wouldn’t think twice about, that would take pressure off supply and prices would ease,” Christopher Stobart, director of consultants CRU Strategies.
The FBI is looking into fraud allegations against Countrywide Financial Corporation, a U.S. government official told CNN.
The investigation is still in its early stages, another government official familiar to the situation said.
The story was first reported in The Wall Street Journal Saturday.
The probe will examine underwriting and mortgage origination practices, and whether the company misrepresented losses related to subprime loans, the paper said.
Subprime mortgages, or home loans given to borrowers with weak credit, have been at the root of a crisis that has rocked the U.S. economy.
Though the Federal Bureau of Investigation has acknowledged ongoing investigations related to the subprime debacle, neither the FBI nor the Justice Department would comment on the specific targets.
"The FBI has been investigating potential fraud in the mortgage/sub-prime lending industry, however, we can not confirm or deny which companies are under investigation," said FBI spokesman Richard Kolko.
A law enforcement official told CNN that there are currently 16 companies being investigated.
Both Countrywide and Bank of America (BAC, Fortune 500), which agreed in January to acquire Countrywide for $4 billion in stock, did not return calls to CNN.
Calabasas, Calif.-based Countrywide is the nation’s largest home lender, responsible for roughly one-fifth of the mortgages in the United States.
When the housing crash began, Countrywide (CFC, Fortune 500) was faced with an increasing number of subprime customers who were delinquent with their mortgage payments payday loans. The company was forced to essentially shut down its subprime lending operations last year to focus on originating loans that conform to Fannie Mae (FNM) and Freddie Mac (FRE, Fortune 500) guidelines, considered to be safe investments.
On Friday Countrywide’s founder and CEO, Angelo Mozilo, testified before the House Committee on Government and Oversight Reform, along with two other CEOs who resigned in the wake of the mortgage crisis - Charles Prince of Citigroup (C, Fortune 500) and Stanley O’Neal of Merrill Lynch (MER, Fortune 500). All three defended their lofty compensation packages, despite the loss of billions to their companies and shareholders.
– CNN America Bureau Producer Kevin Bohn contributed to this report.
Employers unexpectedly cut jobs in February at the steepest rate in nearly five years, a second straight month of employment losses that heightened fears the world’s largest economy has skidded into recession.
“The question appears no longer to be are we going into a recession but how long and deep it will be,” said economist Joel Naroff of Naroff Economic Advisors Inc in Holland, Pennsylvania.
The Labor Department on Friday said 63,000 non-farm jobs were eliminated on top of an upwardly revised loss of 22,000 in January, sharply contrary to Wall Street economists’ forecasts that 25,000 positions would be added in February.
The department also halved the number added in December to 41,000 from the 82,000 estimated a month ago, in a move that underlined the steady deterioration in the U.S cash till payday. labor market.
“The underlying trends are horrible, with worse to come,” said economist Ian Shepherdson of High Frequency Economics in Valhalla, New York. The Federal Reserve “has to ease (U.S. benchmark interest rates) much more,” he said.
The U.S. central bank already has cut its federal funds target rate by 2.25 percentage points since September to its current 3 percent level and is widely expected to slash it again at its next policy-setting session on March 18.
A Reuters poll on Friday found that most major Wall Street dealers expect the fed funds rate to be at 2 percent and possibly lower by the end of April.
STOCK PRICES SUFFER
The cost-lowering power of generic drugs had its biggest impact with drugs used to lower cholesterol, the nation’s most-used drug category, according to a report released last week by Express Scripts Inc., the nation’s third largest pharmacy benefit manager.
These drugs, known as statins or anti-hyperlipidemics, cost 15.5 percent less in 2007, averaging $67.32 per prescription versus $79.48 in 2006. Even after accounting for a 7.5 percent increase in the number of prescriptions filled, the "generic effect" reduced total spending on cholesterol-lowering drugs by 9 percent.
Last year was the first full year patients had access to generic versions of two popular cholesterol-lowering drugs: Pravachol and Zocor payday loan.
Banks may have to swallow reductions in the principal of some troubled home loans to ward off greater losses that could result from outright default, Federal Reserve Chairman Ben Bernanke said on Tuesday.
Warning that mortgage delinquencies and foreclosures are likely to rise, with more declines in house prices, Bernanke called for active measures from both the public and private sectors to stabilize housing markets.
“This situation calls for a vigorous response,” Bernanke said in a speech to the Independent Community Bankers of America, referring to government and private-sector initiatives to slow the rate of home loan failures.
“Measures to reduce preventable foreclosures could help not only stressed borrowers but also their communities and, indeed, the broader economy,” he said.
U.S. government bond prices shed early losses and turned higher, while stocks extended their declines and the downtrodden dollar touched another all-time low against a basket of currencies.
Market bets of a Fed rate cut at its March 18 meeting ticked down slightly to roughly a 66 percent chance of a cut in benchmark interest rates by three-quarters of a percentage point from the current 3 percent.
Bernanke’s comments come as the central bank grapples with the twin dilemmas of a slowing economy and rising inflation fast cash now. U.S. economic growth slowed to a sluggish 0.6 percent at the end of 2007 and hiring declined in January. But inflation rose 4.1 percent in 2007, the largest 12-month rise since 1990.
Current housing difficulties differ from past housing market slumps because of the large number of homeowners who owe more on their loans than their homes are worth, Bernanke said.
Financier Wilbur Ross will invest as much as $1 billion in Bermuda-based reinsurer Assured Guaranty Ltd, the bond insurer said Friday.
WL Ross & Co. will purchase $250 million worth of common stock and commit to buying an additional $750 million shares at the company’s option, and Ross will be appointed to Assured Guaranty’s board.
Bond insurers have struggled to maintain "AAA" ratings as bonds they back lose value amid the credit crisis. Assured Guaranty has been seen as one of the strongest in the sector, despite some exposure to the weakening credit markets.
The closing of the initial $250 million investment is subject to regulatory approvals; any subsequent investments will require shareholder approval, which the company will request at its 2008 annual meeting.
In order to draw on the $750 million commitment, Assured Guaranty (AGO) must maintain ‘AAA’ (stable) ratings for itself, and ‘AA’ ratings for Assured Guaranty Re Ltd http://us-no-fax-payday-loans.com. from credit ratings agencies Standard & Poor’s, Moody’s (MCO) and Fitch. Furthermore, the credit quality of its financial guaranty portfolio and investment portfolio must not decline significantly.
Merrill Lynch & Co. acted as financial adviser to Assured on the deal.
<subhead-metro3/>Illinois still can lead
the world in clean coal
Your article on the Taylorville Energy Center ("As FutureGen fizzles, a different clean coal plant awaits," Feb. 10) points to a critical fact: Despite the loss of FutureGen, Illinois still has a chance to be a global leader on clean coal.
Using cutting-edge technology that gasifies coal to remove pollutants, the privately financed Taylorville project would be the cleanest coal plant in the world, dramatically reducing the exposure to harmful environmental triggers of asthma and lung cancer.
At the same time, this $2.5 billion facility would create thousands of jobs, provide Illinois with a needed source of power, and reduce consumers’ energy costs by an estimated $190 million a year.
Indeed, the Taylorville plant could spur a renaissance for the state’s coal industry. Illinois is home to the second-largest coal reserves in the nation, but with FutureGen off the table and the state having recently suffered the shutdown of the Crown II and Monterey mines, the Illinois coal industry needs a shot in the arm that only Taylorville can provide.
As your article points out, legislation that would have allowed the project to proceed got bogged down last year in Springfield and no final action was taken.
Unlike FutureGen, however, the Taylorville plant is 100 percent within our state’s control. We urge the Illinois General Assembly to act quickly to secure our state’s energy future while doing right by consumers, the economy, and the environment.
This letter was submitted by Phil Gonet, president of the Illinois Coal Association; David Kolata, executive director of the Citizens Utility Board; Michael Carrigan, president of the Illinois AFL-CIO; and Angela Tin, director of environmental programs, American Lung Association of Illinois.
<subhead-metro3/>Job-transition story
was overly optimistic
This is in response to the article about the loss of manufacturing jobs in St. Louis ("Recession resilient: Why we may be able to bounce back faster this time," Feb. 24).
Obviously, this article was trying to put a positive spin on a negative situation. However, I thought that the article lacked much in the way of journalistic credibility by taking the easy way out. Instead of the underlying theme of, "Things aren’t so bad, right?" the article should have called a spade a spade by taking outsourcing businesses to task.
These corporations are systematically dismantling the foundation of modern American society. The manufacturing base (bolstered by strong union membership) brought decent incomes, benefits, job security and respectable pensions to an entire class of people for many years.
Instead of looking at it, like the ex-Chrysler worker does — that unions "priced ourselves out of business" — we should be pointing the finger in a different direction.
Corporations aren’t holding up their end of the bargain. Why should well-paid American workers be forced to "compete" with workers that make a fraction of the wages and the protections that our workers get?
There no longer are any truly "American companies" — but unfortunately, the American worker does not have legal protection or agility that corporations do to enforce their will paydayloan.
Instead of being ruled by law, morality, or even national sovereignty, today’s corporations make the robber barons of yesteryear look like amateurs by making the globe their personal chess game.
Additionally insulting is the way that their abhorrent behavior is justified by merely saying the words "free market" or "free trade" while hiding behind puppet groups like the WTO and the IMF and World Bank.
Worse still, these companies are given financial incentives to outsource, union bust and pay slave wages to those in developing countries while controlling their resources.
What good is a system that rewards corporations for devastating communities with plant closures and layoffs, lowering overall wages and tarnishing the quality of life for millions of Americans — nay, millions worldwide — let alone the damage we are doing to our environment?
The real question isn’t, "What is wrong with the American worker?" The real question is, "What is wrong with the system, and what can we do to change it?"
Tim Morin | Chicago
The writer works for a manufacturing company in Chicago.
<subhead-metro3/>Free trade agreements
need our attention
The article "Andean pact in limbo — again" (Feb. 19) highlights a classic Catch-22: Producers and traders are in a bind.
While the Andean Trade Preferences Program has many advocates, and the argument about long-range legislation makes sense, the whole package of Free Trade Agreements, or FTAs, needs our attention.
Mexican Catholic bishops issued a statement in January indicating the costs of NAFTA to rural communities: Loss of land, low prices for agricultural products due to subsidized U.S. and Canadian products and the breakup of family and culture. CAFTA is doing the same thing to Central America. We see the results here with mass migrations of workers seeking employment in the United States, having no alternatives at home.
Now the focus is on the Andean countries. As long as the trade agreements favor the U.S. to the detriment of the partner country, what could be a good thing turns into a nightmare.
One must focus especially the ongoing abuses in Colombia, where 3.8 million displaced people are forced from their homes: a disproportionate number are Afro-Colombian and indigenous people; families of union organizers, rather than labor leaders themselves, murdered so as not to count in the closely watched assassination statistics; purportedly demobilized paramilitaries resurfacing with new names and intimidating those in the act of defending human rights; and increased extrajudicial executions of civilians by members of the Colombian armed forces.
Congress needs to look at the big picture and create just trade policies. The current FTAs are destructive and inhumane.
Marilyn Lorenz | St. Louis
Billionaire Wilbur Ross has agreed to invest up to $1 billion in Assured Guaranty Ltd (AGO.N: Quote, Profile, Research), bypassing big bond insurers like Ambac Financial Group Inc (ABK.N: Quote, Profile, Research) in favor of a rival that has largely avoided the credit problems plaguing the industry.
Ross agreed to buy $250 million of common shares of Assured and committed to purchase up to $750 million in additional stock at the company’s option.
Investors had hoped that Ross’s WL Ross & Co LLC would help rescue Ambac, after reports last month that the tycoon was eyeing an investment in the second-largest bond insurer. Ambac’s efforts to raise new capital are progressing more slowly than hoped, according to people briefed on the matter.
Even without new funds, though, Ambac’s main unit has enough capital to maintain its top credit ratings, Moody’s Investors Service said on Friday.
The combination of positive and negative news meant that Ambac’s shares traded as much as 8.3 percent lower and 2.5 percent higher before settling to essentially unchanged.
Assured Guaranty shares rose as much as 15.8 percent.
Ross told Reuters that he had chosen Assured Guaranty because it needs capital to pursue new business, rather than to cure damage.
“The idea of this capital is .. cash advance. not to simply patch a hole,” Ross said in a telephone interview, adding that he was still in conversations with other bond insurers.
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