Rio Tinto, Onwards and Upwards

October 13th, 2009

backhoeI noticed recently Rio Tinto’s stock has been on the increase since July 2009, when the Chinese government snatched four of its employees in Shanghai and accused them of corporate espionage. The Company’s business is finding, mining and processing mineral resources. Its major products include aluminum, copper, diamonds, energy products, gold, industrial minerals (borates, titanium dioxide, salt and talc), and iron ore. The abduction of the employees shook the business world’s confidence in doing business in China, especially where the State has interests. Business, though, goes on: Rio’s stock on the FTSE is up 25% year-on-year. China is still holding the employees; theoretically, until contract negotiations with China steel makers have concluded – preferably with the 40% discount the Chinese steel producers have been looking for. With China buying from the spot market to meet demand born of the government fiscal stimulus, the near future is bright as gold for Rio. Let’s hope the same can soon be said for its Shanghai office.

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