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''Smart money'' is said to want to be short the dollar
By David Ljunggren
Reuters
Thursday, October 21, 2004
http://www.reuters.com/financeQuoteCompanyNewsArticle.jhtml?
duid=mtfh03993_2004-10-21_19-07-00_n21296946_newsml
OTTAWA -- Prime Minister Paul Martin welcomed on
Thursday the idea of Chinese investments in Canada's
natural resource sector but his comments angered
legislators who said Canadian sovereignty could be at
risk.
Noranda Inc., the country's biggest mining firm by
sales, is in talks with Chinese state firm Minmetals
on selling 100 percent of the copper, nickel, and
zinc miner for what analysts estimate could be $5
billion.
China's foreign minister told the Globe and Mail
newspaper that Beijing was encouraging firms to
put money into the Canadian resource sector.
Asked if the prospect of China investing heavily in
Canadian natural resources firms worried him, Martin
said: "I think this is something that has to be judged
on a case-by-case basis ... but fundamentally I think
that this is a good thing."
If Minmetals did make a bid it would have to be
approved by Ottawa. Opposition legislators, citing
what they say is the threat to Canadian jobs and
China's poor human rights record, are threatening to
delay the deal.
Particularly angry are the left-leaning New Democrats,
who are helping keep Martin's minority government in
power.
"I find it unacceptable ... that the prime minister isn't
standing up and telling us what his plan is to deal with
(the fact) that our resource industries are being bought
up by foreign governments and foreign investors," New
Democrat leader Jack Layton told Parliament.
"How can Canadian communities and workers know
they're going to be protected?"
One metals industry analyst said the political fallout
from the proposed deal could delay other bids by
Chinese firms for Canadian resource companies.
Martin said Canada was investing heavily in China
and said the proposed Noranda deal was a sign of
China's increasing economic growth and maturity.
"It's a very, very important market for us and so
anything we can do to really strengthen the links
between our two countries is a good thing," he told
reporters.
"But there are issues, there are obviously issues. In
the case of China (there is) the whole question of
human rights and these are issues which we
obviously -- in any discussion -- will take into
account."
Federal Industry Minister David Emerson said last
week that Ottawa would consider China's human
rights record when it examined the planned Noranda
deal.
Analysts said speculation about further Chinese
takeovers could be a reason behind Thursday's
strong gains by metals stocks on the Toronto Stock
Exchange.
Shares in Teck Cominco Ltd. climbed 5.5 percent to
C$29.05, Inco Ltd. was up 2.3 percent at C$43.70
and Noranda gained 2.6 percent to C$20.75.
Lawrence Smith, a mining analyst at TD Newcrest,
said the only other possible takeover candidates in
Canada for metals-hungry Chinese firms would be
Inco, the world No. 2 nickel miner, or Teck Cominco,
the world's largest zinc producer.
But he added: "If you're talking about further Chinese
takeovers in the Canadian market, they're running into
fairly significant political flak just talking about
Noranda. For them to do the likes of a Teck Cominco any
time in the next few years would certainly raise the
hackles of people."
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