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Jaguar Land Rover recalls “Discovery 3″

Jaguar Land Rover Auto Trade (Shanghai) Co. Ltd. is to recall some imported “Discovery 3″ SUVs because of brake and engine flaws.
It is estimated just over 1,000 of the diesel-fueled SUVs would be involved, said the General Administration of Quality Supervision, Inspection and Quarantine.
The flaw in the “Discovery 3″ SUVs, produced between Oct. 31, 2005 and June 26, 2009, leads to extended braking distances.
A smaller percentage of those, produced between June 2007 and May 2008, have a flaw in their high-pressure diesel pumps, which may lead to leakage, or even combustion in extreme cases.
The manufacturer will replace defective parts for free. Owners can go to their nearest maintenance center authorized by the manufacturer for check-up and replacement, or call 800-820-0187 for more information.

BP divests Ningbo LPG assets

British oil major BP has sold its LPG (Liquefied petroleum gas) assets in the port city of Ningbo to a local trader of the fuel, the latest move by the oil giant to slim its LPG business in China.
BP sold the LPG assets in its subsidiary Ningbo BP LPG Co to Oriental Petroleum (Yangtze) Ltd, the British oil company said.
The deal was closed as of Aug 21, BP said in a statement, but did not disclose financial details.
Ningbo BP LPG Co operates a 500,000 cu m LPG terminal on Daxie Island, which is under jurisdiction of Ningbo city government.
The terminal, the largest in China, has two refrigerated caves each with a capacity of 250,000 cu m and a dock capable of berthing 50,000 dwt vessels.
The sale of Ningbo assets, according to industry experts, is a sign that BP is continuing its strategy of slimming down its LPG business in China, a practice they say the British company has been doing in the past several years.

BP, however, said the deal will not affect its commitment on China’s LPG market.
“This transaction does not affect BP’s commitment to provide quality products and services to our LPG retailing customers (in China),” BP said in a statement to China Daily yesterday.
In addition to Ningbo LPG assets, BP owns the 400,000 cu m Zhuhai LPG terminal in southern China’s Guangdong province, China’s second-largest terminal.
Zhangjiagang Oriental Energy Co, which is controlled by Oriental Petroleum (Yangtze) Ltd and listed in Shenzhen, is likely to operate the Ningbo LPG assets.
The Ningbo deal comes on the heels of another BP asset sale in China.
BP last month signed a conditional agreement with the Hong Kong-based Friendly Energy to divest its refrigerated tanks and some related facilities in BP’s LPG terminal in Suzhou in East China’s Jiangsu province.
The Suzhou LPG terminal has a capacity of a 68,000 cu m and consists of two refrigerated storage tanks both with a capacity of 31,000 cu m and six pressurized storage tanks with a capacity of 1,000 cu m.

Steel maker shows his mettle in take-over bid

Shandong Iron and Steel Group, the world’s eighth largest steel maker, is suffering a setback in its proposed takeover bid for Rizhao Iron and Steel Group over differences in the terms of the deal.
Du Shuanghua, the founder of Rizhao Steel, one of China’s most profitable non-State steel mills, is employing delaying tactics against the purchase of a 67 percent stake in the company, according to people familiar with the situation.
In addition, Du was likely to consider moving to another province to restart his steel empire, according to insiders at the company.
The acquisition, which was expected to be pushed through as early as this week, was still under discussion and would probably be finalized next week or by the beginning of September, a senior executive at Rizhao Steel told China Daily.
Another source said the protracted talks are related to the financial terms of the deal. Shandong Steel’s acquisition is not thought to be all in cash. Instead, the company is expected to inject assets such as modern equipment in return for a controlling stake.
Du tried to protect his interests in the consolidation by handing up to 30 percent of Rizhao’s core assets to Kai Yuan Holdings, a Hong Kong-listed company in January.
Although Rizhao Steel is attempting to fight the acquisition, it has to weigh the repercussions of not cooperating with local authorities.
Officials from the local environment watchdog visited Rizhao Steel recently and asked the company to stop production using two boilers, on the grounds the facilities were not in accord with environmental standards, the source from Rizhao Steel said.

A senior official of neighboring Hebei province talked to Du recently, suggesting he should move back to Hebei, where he was born and started his business making steel tubes, the source said.
The consolidation is part of a plan by the Shandong provincial government to build a quality steel production base in Rizhao city with annual capacity of 20 million tons.
Rizhao and Shandong Iron and Steel signed a letter of intent for consolidation in early November. But the deal broke up after Du moved 30 percent of his stake to Kai Yuan Holdings.
“The Shandong provincial government aims to build a large steel group that can compete on the world stage,” said Yu Liangui, a steel analyst from Mysteel. “The steel industry wants to develop a steel industrial zone along the coastline. Rizhao has an advantage over Laiwu Steel and Jinan, in terms of regional position.
“If Shandong Steel has to establish a new factory in Rizhao in response to the government’s plan to build a quality steel production base in Rizhao, it will be in a disadvantageous position if it is facing competition from Rizhao Steel.”
China, as the world’s largest producer and consumer of steel production, is at a disadvantage in the annual international iron ore negotiations because of its limited presence in the industry.
The government wants the steel industry to consolidate, with large steel mills leading the exercise.
Du established Rizhao Steel in the city of Rizhao in 2003. Now the steel mill produces 8 million tons of crude steel annually and contributes one third of GDP to the city.
The Hurun report listed Du as China’s second-wealthiest person last year, with a 35-billion-yuan fortune.
When most Chinese State-owned steel mills suffered heavy losses, Rizhao reported a net profit of about 1.8 billion yuan in the first half of 2009, while Shandong Steel, which has three times the capacity of Rizhao, reported a loss of 1.3 billion yuan.

Siemens bought two Chinese metal companies

German industrial conglomerate Siemens AG bought majority stakes in two small Chinese metal companies on Wednesday.
Siemens, based in Munich, said its energy division acquired the majority stakes in two metal companies based in Hangzhou, Zhejian gprovince. One is Yangtze Delta Manufacturing, a metalworking company, and the other is aluminum foundry GIS Steel&Aluminum Products, according to local media reports.
Siemens said the two companies had a total workforce of 600 employees, with combined revenue of 65 million euros (about 93 million U.S. dollars) in 2008, but it did not release how much it paid to bought these two companies.
Siemens made these two acquisitions to expand its global production network for high-voltage circuit breakers in China and its foundry capabilities from machining through final product assembly, according to the local media reports, as China is now the world’s largest market for power transmission equipment.
“Over the long term, we are anticipating a constantly high demand for high voltage power transmission products in China and are thus securing the requisite capacities to maintain our successful business in this growth market,” Udo Niehage, Siemens’ chief power transmission official said in the company’s statement.

Daewoo in Myanmar gas deal

A consortium led by South Korea’s Daewoo International will invest about $5.6 billion to develop Myanmar gas fields as part of a 30-year natural gas supply deal with China, a group member said yesterday.
The investment comes just a week after China signed a $41 billion liquefied natural gas import deal with Australia.
The Myanmar gas development plan will allow the consortium to supply natural gas to China’s top oil and gas firm, China National Petroleum Corp (CNPC), with a peak daily production of 152.4 million cu m, or about 3.8 million tons annually.
A CNPC spokesman yesterday said he is not aware of the deal.
The supply, due to be available from 2013 from the Shwe and ShwePhyu fields in Myanmar’s A-1 offshore block and Mya field in A-3 offshore block, amounts to about 7 percent of China’s current gas consumption of about 2.225 billion cu m per day.
Currently meeting only 3 percent of China’s total energy needs, gas use is set to grow at a 10 percent compound annual rate to about 5.49 billion cu m per day by 2020, according to Bernstein Research.
Daewoo has a 51 percent stake in the consortium. The other shareholders are India’s Oil and Natural Gas Corp with 17 percent, Myanmar Oil & Gas Enterprise with 15 percent, India’s GAIL with 8.5 percent and Korea Gas Corp with 8.5 percent.
Daewoo will spend $1.68 billion in initial investments for five years until 2014, and KOGAS will spend $299 million, the two firms said in separate statements.
A KOGAS official said the total investment by the consortium would amount to about $5.6 billion, including $4.6 billion in initial spending.
The consortium will undertake production and offshore pipeline transportation, while land transportation to China will be jointly managed with China National United Oil Corp (CNUOC).
The investment still needs approval from the Myanmar government, and CNUOC has yet to decide details of its investment for land transportation to China.

LG Display to build plant in Guangzhou

The South Korean electronics giant LG Display plans to build an advanced liquid-crystal display (LCD) factory in Guangzhou to capitalize on the China’s fast-growing flat-screen television market, the company reported yesterday.
The world’s second-largest liquid-crystal display maker said in a statement that the company signed a preliminary agreement on Friday with the Guangzhou city government to build the new plant, which is expected to be the biggest in China.
The deal, which is still awaiting approval by the South Korean government and the board of Seoul-based LG Display, is estimated to cost as much as $4 billion, according to Maeil Business Newspaper.
LG Display did not disclose details about the new plant, except that it would be an eighth-generation facility capable of making large-size television panels.
That is three generations ahead of China’s most advanced display manufacturing plant, which is owned by domestic LCD maker BOE Technology Group.

Global LCD television shipments increased 27 percent to 30 million in the second quarter, led by demand from China and North America, the research firm DisplaySearch reported last week.
The research firm estimated that the number of LCD TVs sold in China will likely jump 76 percent to 23.6 million this year.
The government’s recent effort to offer subsidies to television buyers in rural areas is expected to further stimulate the market.
Analysts said the current financial crisis might encourage domestic electronics goods makers to reconsider their traditional way of importing expensive LCD displays from overseas providers.
In June, China’s largest LCD panel maker, BOE Technology Group, raised $1.76 billion through share placement to expand its LCD production capacity.
The company is building a sixth-generation factory in Hefei in Anhui province. BOE also plans to build a new LCD production line in Beijing next year the company reported.
The world’s largest LCD maker, Samsung Electronics, and Japan’s largest LCD TV maker, Sharp Corp, also have expressed interest in building factories in China.

Chery to expand overseas

Chinese automaker Chery Automobile Co is ambitious to speed up its global network expansion after stabilizing its foothold in the domestic market.

The company exported about 15,000 vehicles in the first seven months. [CFP]
The Wuhu, Anhui-based auto manufacturer is on track to add six assembly plants outside the mainland this year, boosting its global production network to 15 countries and regions, said Jin Yibo, a spokesman for Chery.
The six destinations will include Taiwan and Thailand in Asia, Syria in Africa and Venezuela in South America, an unnamed executive at Chery told China Daily. The executive did not disclose the other two locations.
“Construction of the assembling facilities in Taiwan, Syria and Thailand have been finished, while the plant in Venezuela is still waiting for local government approval,” the executive said.
Chery’s A3 compact car recently rolled off the production line in Taiwan, and the company will officially launch the model in a few days on the island, the executive said.

Production also started recently in Thailand on Chery’s QQ mini-car, the source said.

The company will bring more models to Syria for local production, including its Tiggo sports utility vehicle (SUV) and A3 compact, targeting African markets.
As the most successful Chinese carmaker in the international market, Chery has introduced its vehicles to more than 60 countries and regions in Asia, Europe, Africa and South America.
Last week, the company officially announced the debut of its business operations in Brazil, with plan to establish 55 dealerships across the country this year.
Luis Curi, president of Chery’s Brazil operation, said that Chery hopes to sell as many as 2,500 Tiggo SUVs in Brazil by the end of this year.

Chery spokesman Jin told China Daily that the company will build an assembly plant in Brazil, the world’s ninth-largest auto market, in the next three years.
The China Association of Automobile Manufacturers reported that in the first seven months of this year, exports of China-made vehicles slumped 60.3 percent over a year ago to 164,800 units as the financial crisis shrank auto demand in markets outside China.
However, Chery still retained its leading position among Chinese automakers with the export of 15,000 units.
Statistics show that in the past three years, Chery contributed more than half of China’s exports of homegrown passenger cars.
Analysts said domestic automakers have been smart to begin shifting their focus from product exports to capital outflows, as overseas production might reduce costs, avoid trade barriers and promote Chinese brands in the international market.
Last month, China’s Chang’an Auto reported it would invest more than $80 million in South Africa to establish a production plant and a financing company in the next five years.
JAC Motors also said in July that it would establish a manufacturing base in Brazil.

Decline slows in profits of central SOEs

Profits of companies controlled by China’s central government continued to fall in the first seven months, but at a slower pace, the state-owned enterprise (SOE) watchdog said Tuesday.
The 136 SOEs directly controlled by the central government generated total profits of 398.35 billion yuan (58.31 billion U.S. dollars) from January to July, down 20.9 percent year on year.
The decline was 5.3 percentage points lower than the January-June figure, according to the State-owned Assets Supervision and Administration Commission (SASAC).
The profits for July alone were 80.98 billion yuan, a rise of 7.7 percent from June.
Sales revenue in the first seven months fell 6.2 percent from the same period a year ago to 6.39 trillion yuan. The decrease was0.1 percentage points lower than the first half.

Iraq may blacklist Sinopec after Addax deal

Iraq’s Oil Ministry will blacklist China’s Sinopec Corp. and prohibit it from competing in a second bidding round for oilfield tenders if it confirms its purchase of Swiss oil explorer Addax Petroleum Corp., a senior Iraqi oil official said on Monday.
Deputy Oil Minister Abdul Karim Louaibi told Reuters the ministry had sent Sinopec a letter asking it about Addax, which is among foreign oil firms that have signed independent oil deals with semi-autonomous Kurdish authorities in northern Iraq.

“The Oil Ministry is committed to not dealing with any oil company that signs oil contracts (with the Kurdish Regional Government) without the approval of the central government and Iraqi Oil Ministry,” Louaibi said in Istanbul. “The reaction of the ministry will be clear, Sinopec will be blacklisted.”

Tensions ease as miners make up

Aluminum Corporation of China (Chinalco), the world’s second largest producer of alumina, says it is willing to further discuss cooperation over bauxite and alumina production with global miner Rio Tinto.
The move indicates an easing of tensions between the two companies.
“Chinalco is still willing to explore the possibility of cooperation with Rio Tinto,” said Zhao Zhengang, director of Chinalco’s Overseas Exploration Department, in response to comments by Rio Tinto’s chief financial officer Guy Elliott.
Elliott said the miner is at the very early stages of talks with Chinalco over a possible bauxite and alumina deal, the Australian Financial Review reported yesterday.
Rio’s relations with Chinalco reached an impasse in June after it abandoned Chinalco’s $19.5 billion capital injection deal that was announced on Feb 12.
Cooperation in bauxite and alumina production was also part of the framework in the previous strategic partnership announced on Feb 12.
“Cooperation was suspended because Rio scrapped the contract, but if there is future cooperation with Rio, the deal will not be set along the same terms as in February. Further cooperation will be based on mutual business demands,” Zhao said.
Lu Yongqing, Chinalco’s vice-president and spokesman, also said the company had indicated its willingness to talk but declined to further comment, Dow Jones reported.
Rio’s Elliott said the talks have only just started and have a long way to go before agreement is reached.
Zhao said he was not willing to comment on Elliott’s statement, but said the possible cooperation was in line with Chinalco’s president Xiong Weiping’s earlier speech regarding Rio.
Xiong said the company was still willing to raise the possibility of further cooperation with Rio Tinto on July 23 when he attended a Sino-Australian investment forum.
Chinalco’s strategic objectives of going international and entering into markets for multiple metals remained unchanged, he said.

Rio Tinto’s relations with China became rocky after it ended talks with Chinalco and turned instead to an iron ore joint venture with rival BHP Billiton on June 5. Xiong said at the time he was extremely disappointed with the move.
Rio Tinto is also locked in protracted iron ore price talks with Chinese steel mills. Relations with China grew more strained when four of Rio’s Shanghai-based employees were accused of bribery and commercial espionage in annual iron ore price talks.
However, analysts believe the restart talks indicate a sign that tensions are beginning to ease. They say negotiations between the two companies are economically sensible.
“Rio has abundant poly-metal resources and most of the poly-metal business is dependent on the Chinese market. If Rio is out of the Chinese market, the business will be seriously affected, which is also against its long term development strategy,” said Yu Liangui, research center director at Mysteel.
Rio and Chinalco have adjacent bauxite deposits in the Australian state of Queensland and have held talks on possible cooperation in recent years.
Rio posted a 65 percent profit drop in the first half of this year, its worst ever.
A deal with FMG indicates China is supporting the development of Australia’s third largest miner into a competitor to Rio within a few years. That means it is sensible for Rio to act in a friendly way towards Chinalco, Yu said.
The large debt incurred by Rio’s 2007 purchase of Alcan at the peak of the commodities boom is causing it problems.
Xu Xiangchun, steel industry director of Mysteel, said Chinalco, as Rio’s largest single shareholder, wouldn’t like to see Rio’s share price plummet. If Rio’s business operates well, it would mean Chinalco would receive a good return on its investment, so further cooperation with Rio would seem economically reasonable.