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To: TobagoJack who wrote (64171)	5/24/2005 1:33:29 AM
From: elmatador	Read Replies (2) \| Respond to of 74559

China told by US to revalue renminbi by 10% TJ, Are they going to do what they are being told to? By Andrew Balls in Washington Published: May 24 2005 01:49 \| Last updated: May 24 2005 04:24 The US Treasury has told the Chinese authorities that they must revalue their currency by at least 10 per cent against the dollar to prevent protectionist legislation in the US congress. Henry Kissinger, former US secretary of state, is one of a number of unofficial envoys who have impressed upon China the urgent need for action on the 10 per cent target, and on the seriousness of the threat from Congress, people with familiar with the administration's efforts said. As well as the minimum 10 per cent target revaluation, Dr Kissinger was briefed by the Treasury on the need for other measures, such as a shift to a currency band against the dollar or a basket against a number of currencies to replace the peg. Bill Rhodes, senior vice chairman of Citigroup, and Brent Scowcroft, who was national security adviser to President Ford and President George H. W. Bush, have also acted as unofficial envoys on behalf of the present administration. Mr Kissinger and Mr Scowcroft were not immediately available for comment. Mr Rhodes declined to comment on talks with Beijing but said: “Apart from any external pressure, I think that it is in China's own interest in the coming months to move towards a market-based interest rate regime, accelerate the opening of the capital account, and move to a more flexible exchange rate system.” Tony Fratto, US Treasury spokesman, refused to comment on the 10 per cent minimum target. “We have made it clear that the interim step should be of sufficient magnitude and flexibility to quell speculative financial flows,” he said. “Without commenting on particular individuals, I would say that it is important for the Chinese authorities to hear from respected individuals who can provide an accurate analysis of the American political environment on this issue.” There was a marked shift in the Treasury's strategy ahead of last month's meeting of the Group of Seven leading industrial countries, with talk of the need for currency flexibility replaced by the call for urgent action. The administration has been spurred by concern over a bill championed by Charles Schumer, Democratic senator, that would impose trade sanctions if China does not act within six months. When John Snow, Treasury secretary, released the department's report on trade and exchange rates last week, he said that the Treasury had called for currency flexibility and that an interim step was needed. The message was that China needed to act within the next six months. A senior administration official said at the time that a 5 per cent revaluation would not be enough. Alan Greenspan said on Friday in response to a question at the Economic Club of New York that a notional 20 per revaluation of the renminbi would have little impact on the US trade balance. Many experts on China say that the increased pressure from the United States may make it harder for the Chinese authorities to take action, and in particular for those who favour a shift in the currency regime to win the argument in Beijing.

To: TobagoJack who wrote (64171)	5/24/2005 3:32:54 AM
From: Snowshoe	Read Replies (2) \| Respond to of 74559

TJ, how can China keep developing when we're running out of energy to mine copper? No wonder mining stocks are tanking... Electroandina Says Chilean Mines May Face Shortage (Update1) bloomberg.com May 23 (Bloomberg) -- Electroandina SA, the largest energy company in northern Chile, said that mining companies in Chile, the world's largest copper producer, may face energy shortages after Argentina cut supplies of natural gas. Companies that use natural gas to run turbines may need to ration electricity to miners in northern Chile as soon as next year as energy demand rises, said Lode Verdeyen, chief executive at Electroandina. Deeper cuts in natural gas exports also might trigger energy rationing for miners in the region, which include BHP Billiton Plc, the world's largest miner. ``The copper business is at huge risk,'' Verdeyen said in an interview. ``What we see coming on is a very bleak future.'' Electroandina, and units of AES Gener SA and Empresa Nacional de Electricidad SA, are among companies that invested in turbines fueled by Argentine natural gas to feed growing copper production in northern Chile. Argentina last year reduced its shipments of the fuel to Chile to ease a shortage at home. State-owned Codelco, which is a shareholder of Electroandina and the generator's biggest client, is studying how to prepare for possible energy shortfalls, such as through purchasing turbines, said Roberto Vial, a spokesman for Codelco in Calama in northern Chile. Codelco has three mines in northern Chile, including its largest. ``We're doing all that we can to have the necessary back up,'' Vial said May 20 by telephone. Mauro Valdes, spokesman in Santiago for Melbourne-based BHP Billiton, and Diego Hernandez, president of BHP Billiton's base metals division, weren't at their offices in Santiago on May 20 to respond to requests for comment by Bloomberg News, said BHP Billiton's public affairs office in Santiago. Today is a holiday in Chile. Prices for copper, Chile's top export, have surged 21 percent in 12 months as demand in China, the biggest user of copper, outpaces supplies. Chile accounts for about a third of global copper supplies from mines. Tough Sell Electroandina, which had losses last year after its energy costs surged, has asked clients to renegotiate contracts to increase energy prices and index prices to fuel costs, Verdeyen said May 17 at the company's offices in Santiago. Codelco's Vial confirmed that Codelco is negotiating fees with Electroandina. Other clients of the generators include BHP Billiton's Cerro Colorado mine, Verdeyen said. ``It's still difficult to convince customers that it's a huge problem,'' Verdeyen said. Argentina said it cut natural gas supplies to northern Chile last month by an average of 27 percent from levels prior to the reductions, which began last year, according to Chile's state-run National Energy Commission. A reduction by half would trigger energy shortfalls, Verdeyen said. Solutions Electroandina is worse off than energy companies in central Chile, which also have had supplies of natural gas cut, said Carlos Diez, an analyst at Fitch Ratings in Santiago. Electroandina's long-term contracts prevent it from benefiting from a decision by the Chilean government to increase energy prices to compensate for higher fuel costs. Electroandina ``probably signed contracts at low prices, thinking they'd have gas for 10 to 15 years,'' Diez said. Now ``they have to generate at high costs and sell cheap.'' Since Codelco is a shareholder, ``it's easier that they get to a long-term agreement to pay more, at some point,'' Diez said. Codelco and Paris-based Suez SA own Electroandina. To contact the reporter on this story: Heather Walsh in Santiago at hlwalsh@bloomberg.net Last Updated: May 23, 2005 14:16 EDT