Sky-high gold price greets mine cos in mile-high city 20 Sep 2010 09:00

* Gold price up 25 pct in year, hits record high

* Bulls see gold piercing $1,300/ounce barrier soon

* Soros, Greenspan weigh in on precious metal

By Steve James

DENVER, Sept 19 (Reuters) - Small wonder that gold mining executives are smiling these days.

At the annual Denver Gold Forum industry meeting this week, the talk among gold company executives and buy-side fund managers is likely to be less about rising mining costs than about just how high the price of the precious metal might go.

The gold price has soared 25 percent since the industry's get-together a year ago, and it hit a record high on Friday.

Many gold bulls seem to think the sky's the limit. Even billionaire George Soros, who has warned that gold is "the ultimate bubble," has heavily invested in gold and gold-mining companies through his Soros Fund Management LLC hedge fund.

Perhaps coincidentally, the treasures of King Tutankhamun, featuring gilded artifacts of the "Golden King" and the Egyptian pharaohs, are on show at the Denver Art Museum at the same time as the Sept. 20-22 Gold Forum.

But you don't have to be an archeologist to uncover the fact that since last year's gathering in the mile-high city, spot gold <XAU=> has gone from about $1,020 per ounce to a record high of $1,280 on Friday.

That's what a recession will do for the metal, which is traditionally regarded as a safe haven for investors in times of economic uncertainty.

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a chart on the new gold price rush see

http://link.reuters.com/gup24p ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

"Gold is the only actual bull market currently," Soros said at a Reuters Newsmaker event last week. "In the present circumstances that may continue."

But Soros did hedge a little, saying, "It may go higher. But it's certainly not safe and it's not going to last forever." After asset classes set new highs, Soros observed, there are almost always immediate reversals that disappoint investors.

One closely watched industry report released last week saw gold above $1,300 this year, setting successive all-time highs, as uncertainty about economic recovery and a sovereign debt crisis stoke investment interest.

Investment demand in gold should benefit from the threat of inflation as central banks cut interest rates to battle double-dip recession and high unemployment, metals consultancy GFMS Ltd said in its Gold Survey 2010 Update.

"We could easily see gold spike comfortably above $1,300 before the year's out," said GFMS Chairman Philip Klapwijk. "Further gains in 2011 are far from out of the question."

Jeffrey Nichols, managing director of American Precious Metals Advisors, sees gold hitting $1,500 in the first half of 2011, or possibly even before the end of this year.

"Not only will prices move substantially higher in the months ahead, but the uptrend still has years to go ... with gold very likely reaching $2,000 and eventually $3,000 or even $5,000 before the gold-price cycle shifts into reverse," Nichols said.

"However, I also expect continued high gold-price volatility with big corrections along the way, so much so that some observers will prematurely declare the bull market over long before its time," he said.

Former Federal Reserve Chairman Alan Greenspan also talked gold at the Council on Foreign Relations last week.

"It is the ultimate means of payment and it is a signal that there is a problem with respect to currency markets globally. Now I don't think it's a serious problem -- unless you're short gold -- but it strikes me that it's the canary in the gold mine to keep an eye on."

With sky-high gold prices expanding profit margins, gold executives will likely focus on how their extra cash will fund future projects. In recent years, they have grappled with issues like renewing reserves, controlling costs and struggling to put projects into production.

Presenters at the Denver event, which runs through Wednesday, will include the world's biggest two producers, Barrick Gold <ABX.TO> <ABX.N> and Newmont Mining Corp <NEM.N>, which is based in Denver. South African giants AngloGold Ashanti <ANGJ.J> and Harmony Gold Mining Co <HARJ.J> are also set to be on hand. (Additional reporting by Frank Tang, Herb Lash and Ed Krudy in New York; Editing by Gary Hill)

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China's BYD buys 18 pct stake in lithium miner 17 Sep 2010 08:59

HONG KONG, Sept 17 (Reuters) - Chinese car and battery maker BYD <1211.HK> said it had acquired an 18 percent stake in Zhabuye Lithium for 201 million yuan ($29.89 million).

Zhabuye Lithium owns 20-year exclusive mining rights for the Zhabuye salt lake, the biggest lithium mine in China. Lithium is a key raw material in some rechargeable battery types.

The price of the deal represented about 2.6 times Zhabuye Lithium's book value, analysts said.

BYD, which is 10 percent owned by Warren Buffett's Berkshire Hathaway Inc <BRKa.N>, said in a statement late Thursday that the acquisition would boost the competitiveness of its battery business.

In a note commenting on the deal JP Morgan analyst Charles Guo said BYD's vertical integration approach could reduce costs of lithium ferrous phosphate, which accounts for 40 percent of overall electric car battery costs.

In 2008, BYD bought a high-grade silicon ore mine in Shangluo, in the western province of Shaangxi, to extract solar-grade polysilicon.

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FACTBOX-Global drinks firms expand reach into Asia 02 Sep 2010 12:34

Sept 2 (Reuters) - Big beverage firms are expanding their reach into Asian markets to gain exposure to a growing class of wealthy and brand-conscious consumers.

For a related ANALYSIS on Southeast Asia's fast-growing drinks sector: [ID:nSGE67T03C]

Here are some recent moves by major firms:

FRASER & NEAVE <FRNM.SI>

The beverage and property conglomerate said in late August it has agreed to buy a 23.08 stake in Malaysia's Cocoaland Holdings Berhad <CCLD.KL> for $17.40 million to expand its food business.

KIRIN HOLDINGS <2503.T>

The Japanese brewer said in July it will buy a 14.7 percent stake in beverage and property conglomerate Fraser & Neave <FRNM.SI> for $953 million. [ID:nSGE66P0DT]

Kirin already owns a 48 percent stake in San Miguel Brewery <SMB.PS>, the beer arm of southeast Asia's biggest food and drinks group San Miguel Corp <SMC.PS><SMCB.PS>.

PEPSICO INC <PEP.N>

Pepsi said on Aug. 16 it plans to invest $250 million on a variety of projects in Vietnam over the next three years as it looks for more growth in emerging markets. [ID:nN16257348]

Pepsi and partner Strategic Beverages (Thailand) in June cancelled a tender to buy all the shares in Thai Bottler Serm Suk <SSC.BK> after failing to get the minimum specified in their bid. The outcome of the tender offer did not affect PepsiCo's long-term commitment to Thailand, the companies said. [ID:nSGE65a02K]

ASAHI BREWERIES <2502.T>

Japan's Asahi Breweries said on Aug.26 it will buy Australian fruit juice maker P&N Beverages for A$364 million. [ID:nTOE67P05Y]

Asahi president said on Aug.3 the company expects to have $9.2 billion for acquisitions over the next five years, with a focus on Asia and Oceania. [ID:nTOE67107L]

COCA-COLA <KO.N>

The world's No.1 soft drinks company in March announced the construction of a bottling plant in Malaysia. The plant is the first step in Coca-Cola's plan to invest $285 million in Malaysia over five years, the company said.

In September 2009, Coca-Cola said it would invest more than $200 million in Vietnam over three years. [ID:nHAN411583]

SAPPORO HOLDINGS <2501.T>

Japan's Sapporo Holdings said in December it would enter the Vietnamese market by taking a 65 percent stake in a beer joint venture with Vietnam National Tobacco Corp. [ID:nTOE5B90A2] (Reporting by James Topham in Tokyo and Dhara Ranasinghe in Singapore; Editing by Valerie Lee) ((dhara.ranasinghe@thomsonreuters.com; +65 6870 3277)) Keywords: BEVERAGES/ASIA

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ANALYSIS-Southeast Asia drinks sector sparkles 02 Sep 2010 12:33

* Kirin says now is time to focus on SEAsia, not China

* Coke, Pepsi, Danone could step up in SEAsia after quiet yr

* Analysts say more mergers, regional tie-ups likely

* Watch Unilever Indonesia, Malaysia's Mamee-Double Decker

By Dhara Ranasinghe and James Topham

SINGAPORE/TOKYO, Sept 2 (Reuters) - Global drinks firms, thirsty for acquisitions to expand their offerings and reach, are eyeing assets in Southeast Asia, as tough regulatory hurdles quash their interest in giants China and India.

Some deals are already in the bag, with Kirin Holdings <2503.T> recently snapping up a stake in 127-year old Singapore-listed Fraser & Neave <FRNM.SI>(F&N) and Asahi's <2502.T> $322 million purchase of Australian fruit juice maker P&N, to combine with its Schweppes drinks unit.

More mergers and strategic tie-ups are brewing, with global players expected to eye alliances with companies such as Unilever Indonesia <UNVR.JK> and Malaysia's Mamee-Double Decker <MAME.KL>, maker of the popular Mamee noodles.

"There are lots of compelling reasons to expand in Southeast Asia," says Chris Wong, Senior Investment Manager at Aberdeen Asset Management in Singapore.

"China is not an easy market to navigate; whether with regulation or distribution networks. India is a closed market," Wong said referring to strict rules in India on foreign firms operating there.

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FACTBOX on recent activity in SEAsian drinks sector:

[ID:nSGE67J04X]

Graphic on growth in the ASEAN drinks market:

http://link.reuters.com/rac67n

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The soft drinks market in the ASEAN (Association of South East Asian Nations) region, which includes Singapore, Malaysia, Vietnam, Thailand and the Philippines, is expected to grow by more than 40 percent in the next five years to $17 billion by 2014, according to market research firm Euromonitor International.

While the Chinese and Indian markets are forecast to grow by more than 70 percent each by 2014, Southeast Asia's beverage market is viewed as less risky with potential of its own, thanks to a growing class of wealthy and brand-conscious consumers that compares with saturated markets in the west and Japan.

Coca-Cola <KO.N>, the world's No.1 soft drinks firm, cancelled plans last year to buy China's Huiyuan Juice <1886.HK> after the deal was blocked on anti-trust grounds, encouraging drinks companies to look at other parts of Asia for investment.

"Now is not the time to increase investments or expand (into China); rather the focus is Southeast Asia," Senji Miyake, president of Japan's No.1 brewer, Kirin Holdings <2503.T>, said at news conference last month.

FEW FOR SALE, PRICES HIGH

Analysts expect global drinks firms to seek more mergers or tie-ups with local companies which have strong brands and distribution networks.

"While it is hard to pinpoint the right candidate, generally those local companies with strong brands and unique distribution and material sourcing strength could be attractive," said Euromonitor Senior Beverages Analyst Hope Lee.

Kirin bought its stake in Fraser & Neave for $953 million to bolster its soft drinks and dairy products businesses in Southeast Asia.[ID:nSGE66P0DT]

Asahi Breweries President Naoki Izumiya has said the firm would have $9.5 billion on tap for acquisitions over the next five years, with a focus on Asia and Oceania. Last week it bought Australian juice maker P&N. [ID:nSGE67P0MV] [ID:nTOE67107L].

Malaysia's CI Holdings <CIHB.KL>, which owns the license to manufacture Pepsi, may also look to expand, say analysts.

"CI Holdings, F&N, Mamee are some of the bigger boys looking for well-run companies in the small cap space, but there aren't many and those that sell demand high prices," said Khair Mirza, senior analyst at Maybank Investment Bank in Kuala Lumpur.

Coca-Cola's bottling and distribution arrangement with F&N Holdings Bhd <FRAS.KL>, meanwhile, expires next year. It is setting up its own plant in Malaysia, but there has so far been no sign of any local tie-ups.

Beyond Southeast Asia, Australia, with a beer market that offers some of the highest profit margins in the brewing world, is also on the radar screens of global drinks firms, with Foster's <FGL.AX> beer unit at the centre of takeover talk. [ID:nSGE67M0MQ]

Analysts say Australian food manufacturer Goodman Fielder <GFF.AX> could be a possible target for an Asian drinks predator.

"The advantage of that is Goodman Fielder would have fairly good ties into Australian grain buying which might help foreign buyers who would want that sort of a relationship with wheat sellers," said Daniel Nelson, investment analyst at Constellation Capital Management in Sydney.

PREMIUM BUYS

Japanese drinks firms have an added incentive in that a strong currency lowers the price of targets in yen terms. [ID:nTOE679050]

Kirin, which owns a 48 percent stake in Philippine brewer San Miguel <SMB.PS> had described its business in Southeast Asia as "weak". Analysts say the F&N move shows Kirin is now on the offensive after dropping a largely defensive attempt to merge with Japan rival Suntory [SUNTH.UL] earlier in 2010.

Merger talk may be one reason why food and beverage stocks are held at a premium; investors are paying 24.4 times for the earnings of such shares in emerging Asia-Pacific versus a price multiple of 17.9 in all sectors, Thomson Reuters data shows.

Exposure to a consumption story that is helping Malaysia's beer market grow at an annual rate of 4-5 percent, compared with 0-1 percent in the U.S. beer market, is another reason. Vietnam's beer market is growing by around 5 percent a year, according to CLSA.

"Whether it's beer or food, the trend is the same. Everyone wants a bit of the emerging market story," said Wong. (Additional reporting by Victoria Thieberger in MELBOURNE and Fong Min Hun in KUALA LUMPUR, Editing by Valerie Lee) ((dhara.ranasinghe@thomsonreuters.com; +65 6870 3277; Reuters Messaging: dhara.ranasinghe.reuters.com@reuters.net) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)) Keywords: BEVERAGES/ASIA

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INTERVIEW-China waste treatment firm C&G eyes SE Asia 02 Sep 2010 11:52Wa

* Eyes waste treatment projects in Southeast Asia

* Negotiating projects in Thailand and northeast China

By Eveline Danubrata

SINGAPORE, Sep 2 (Reuters) - C&G Environmental Protection <CGEP.SI>, a Chinese waste-to-energy firm, is in talks to build and operate a 500-600 tonnes per day plant in Thailand, and also plans to bid for projects elsewhere in Southeast Asia. Five years ago, the Singapore-listed firm was wholly involved in fibre manufacture.

Now, it has one waste processing plant operating in China and three that will be fully operational this year and is seeking opportunities in Vietnam, Indonesia and the Philippines, executive director Lin Yan told Reuters in an interview on Thursday.

"These countries have interest in waste-to-energy projects and they present investment opportunities," he said. The firm generally funds its projects with 65 percent coming from loans and the remaining using internal resources.

Waste-to-energy is the process of creating energy from waste incineration.

C&G, which was listed on the Singapore stock exchange in 2005 as a fibre manufacturer, said it had divested all its exposure to the textile business to focus on the burgeoning waste-to-energy sector.

In Thailand, the firm is in talks with the local government to build a waste treatment plant in a major city, Lin said, without giving details.

It is also in talks for another plant in northeast China that can handle 1,000-1,200 tonnes of waste a day, and hopes negotiations will be concluded in the next few months, Lin said.

With three of its projects expected to start full-scale operation by the end of this year, the firm's total waste treatment capacity will double to 3,600 tonnes a day.

"The development of the economy and urbanisation have led to the creation of a lot of waste, so there will be huge demand for waste-to-energy in different cities," Lin said.

"The industry has strong natural growth prospects and the China government also heavily encourages this industry," he added.

DMG & Partners said with the completion of its switch from the textile business, C&G is now a pure environmental company. The firm is now trading at 21 times its 2010 financial year earnings and 4 times its 2011 earnings. DMG does not have a rating on the stock.

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FACTBOX-World's top five producers of phosphate 02 Sep 2010 14:54

  TOKYO, Sept 2 (Reuters) - Phosphate is one of the three key 
nutrients that are used in fertilisers, and is a target of 
Japanese trading houses as they look to invest in upstream assets 
overseas to tap growth in the fertiliser market. [ID:nTOE67T06I] 
    The other two nutrients are nitrogen and potash. 
    Phosphate contains phosphorous, an important element for the 
human body to build and repair cell walls. It is found in the 
form of phosphate rock, which is processed into diammonium 
phosphate and other fertiliser derivatives. 
     While nearly 30 countries produce phosphate rock, China, the 
United States and Morocco are the largest producers, together 
accounting for two-thirds of world production. Morocco alone 
accounts for more than 30 percent of global exports. 
    The world's top producers -- many of them are government 
owned -- include Office Cherifien de Phosphate of Morocco, Mosaic 
Co <MOS.N> of the U.S., FosAgro of Russia and Yuntianhua Group of 
China <YTHGR.UL> 
    Annual global production is around 170 million tonnes, while 
estimated reserves stand at 15 billion tonnes. This means the 
reserves that can be developed using current technology can be 
depleted in 90 years, according to data from the U.S. Geological 
Survey. 
   That compares with 230 year's worth of reserves for potash. 
   Here is a list of the world's top 5 phosphate producing 
countries and their reserves. 
     
    Top 5 Phosphate Producers  
              (in mln tonnes) 
    Country    Production (2008)  Reserves 
    1 China           50           4,100 
    2 US              30.9         1,200 
    3 Morocco,  
      West Sahara     28           5,700 
    4 Russia          11             200 
    5 Tunisia          7.8           100 
    Source: U.S. Geological Survey Mineral Commodity Summaries 
 (Reporting by Yuko Inoue) 

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