Friday, September 4, 2009

Beijing's derivative default stance rattles banks Industries Financial Services & Real Estate Reuters

Beijing's derivative default stance rattles market
Monday, 31 Aug 2009 07:04am EDT

UPDATE 1-Beijing's derivative default stance rattles banks

Mon Aug 31, 2009 7:42am EDT

* State-owned firms may default on commodity hedges - report

* Bankers dismayed, confused by report; seek more details

* Lawyers question legality of the move

* Traders suspect lurking losses may have prompted warning (Adds analysts comments)

By Eadie Chen and Chen Aizhu

BEIJING, Aug 31 (Reuters) - A report that Chinese state-owned companies will be allowed to walk away from loss-making commodity derivative trades provoked anger and dismay among investment bankers on Monday as they feared it may set a damaging precedent.

The State-owned Assets Supervision and Administration Commission, the regulator and nominal shareholder for state-owned enterprises (SOEs), told six foreign banks that SOEs reserved the right to default on contracts, Caijing magazine quoted an unnamed industry source as saying in an article published on Saturday.

While the details of the report could not be confirmed, it was Monday's hot topic in financial circles from Shanghai to Singapore as commodity marketers feared that companies holding underwater price hedges could simply renege on the deals, costing banks millions of dollars in profit.

The warning from SASAC follows a series of measures from Beijing this year to crack down on the sale of derivative products by foreign banks to Chinese enterprises, principally big consumers, who bought protection against higher prices last year only to watch the market collapse -- leaving them with losses.

While many companies including top airlines have come clean on the losses, some analysts fear another wave may follow.

"I wouldn't be surprised if more state firms emerge with big derivatives trading losses, otherwise SASAC wouldn't come out with such a radical move," said a Hong Kong-based derivatives analyst, who like most other industry officials and bankers declined to be named due to the high sensitivity of the issue.

A SASAC media official said on Monday that he was waiting for the "relevant department's" official comment before he can clarify to media. A government official said that the Bureau of Financial Supervision and Evaluation under SASAC was handling the issue. The official declined to be named and did not elaborate.

Spokespersons at Goldman Sachs (GS.N) and UBS (UBSN.VX) declined comment, and media officials at Morgan Stanley (MS.N) and JPMorgan (JPM.N) were not immediately available for comment. All are major global providers of commodity risk management.

No bank were named in the Caijing report. The SASAC media officer also declined to identify any specific banks.

"It's a handful of companies who are being encouraged by regulators to re-negotiate," said a second banking source. "It's outrageous, but it's China, so everyone is treading very carefully."

DAMAGING PRECEDENT

For banks that are hoping to sell more derivatives hedges in China, the world's fastest-expanding major economy and top commodities consumer, the danger goes beyond the immediate risk to existing contracts to the longer-term precedent that suggests Chinese companies can simply renege on deals when they like.

The report follows an order from SASAC in July that required all central government-controlled state companies engaged in trading derivatives to make quarterly reports about their investments, including details of holdings and performance.

But the reported letter opened several important questions that could not immediately be answered.

"If we were among the banks receiving that letter, we would be very angry. But now the key is to find out more details on the letter: In whose name the letter was issued, the government or the corporate's? And under what was the reason for defaulting?" said a Singapore-based marketing executive with a foreign bank.

The source, whose bank did not receive a letter, said that Air China, China Eastern and shipping giant COSCO -- among the Chinese companies that have reported huge derivatives losses since last year -- had issued almost identical notices to banks.

"If it's in the name of the government, the impact will be very negative," said the source, who declined to be named.

Beijing-based derivatives lawyers said the so-called "legal letter" has no legal standing -- SASAC as a shareholder has no business relationship with international banks.

"It's like the father suddenly told the creditors of his debt-ridden son that his son won't pay any of his debt," said a lawyer from the derivatives risks committee of the Beijing Lawyers Association.

It's also unclear why Chinese state firms, which have complained that their foreign banks sometimes did not disclose full information of potential risks when selling them complicated products, did not seek redress through the courts.

"If that is the case, these firms should seek through legal measures to safeguard their rights, instead of turning to the authorities for political interference," said a different lawyer.

SASAC took over the job of overseeing SOEs' derivatives trading from the securities regulator in February after several Chinese firms reported huge losses from derivatives.

For a factbox of China's derivatives debacles:[ID:nPEK206094] (Reporting by Eadie Chen and Chen Aizhu in Beijing, Alfred Cang in Shanghai, George Chen and Michael Flaherty in Hong Kong; Editing by Jonathan Leff)

Information Researched By: Sister Anonymous

Tuesday, September 1, 2009

China Tightening Control of Rare Earth Minerals

China Tightens Grip on Rare Minerals

By KEITH BRADSHER

Published: August 31, 2009

HONG KONG — China is set to tighten its hammerlock on the market for some of the world’s most obscure but valuable minerals.

Juergen Bauer/www.smart-elements.com

China is cutting exports of elements like terbium, pressuring manufacturers to open factories there.

Multimedia

Rare Wealth

Yuriko Nakao/Reuters

Toyota’s Prius hybrids use several pounds of neodymium, a rare earth, in their electric motors.

China currently accounts for 93 percent of production of so-called rare earth elements — and more than 99 percent of the output for two of these elements, dysprosium and terbium, vital for a wide range of green energy technologies and military applications like missiles.

Deng Xiaoping once observed that the Mideast had oil, but China had rare earth elements. As the Organization of the Petroleum Exporting Countries has done with oil, China is now starting to flex its muscle.

Even tighter limits on production and exports, part of a plan from the Ministry of Industry and Information Technology, would ensure China has the supply for its own technological and economic needs, and force more manufacturers to make their wares here in order to have access to the minerals.

In each of the last three years, China has reduced the amount of rare earths that can be exported. This year’s export quotas are on track to be the smallest yet. But what is really starting to alarm Western governments and multinationals alike is the possibility that exports will be further restricted.

Chinese officials will almost certainly be pressed to address the issue at a conference Thursday in Beijing. What they say could influence whether Australian regulators next week approve a deal by a Chinese company to acquire a majority stake in Australia’s main rare-earth mine.

The detention of executives from the British-Australian mining giant Rio Tinto has already increased tensions.

They sell for up to $300 a kilogram, or up to about $150 a pound for material like terbium, which is in particularly short supply. Dysprosium is $110 a kilo, or about $50 a pound. Less scare rare earth like neodymium sells for only a fraction of that.

(They are considerably less expensive than precious metals because despite the names, they are found in much higher quantities and much greater concentrations than precious metal.)

China’s Ministry of Industry and Information Technology has drafted a six-year plan for rare earth production and submitted it to the State Council, the equivalent of the cabinet, according to four mining industry officials who have discussed the plan with Chinese officials. A few, often contradictory, details of the plan have leaked out, but it appears to suggest tighter restrictions on exports, and strict curbs on environmentally damaging mines.

Beijing officials are forcing global manufacturers to move factories to China by limiting the availability of rare earths outside China. “Rare earth usage in China will be increasingly greater than exports,” said Zhang Peichen, the deputy director of the government-linked Baotou Rare Earth Research Institute.

Some of the minerals crucial to green technologies are extracted in China using methods that inflict serious damage on the local environment. China dominates global rare earth production partly because of its willingness until now to tolerate highly polluting, low-cost mining.

The ministry did not respond to repeated requests for comment in the last eight days. Jia Yinsong, a director general at the ministry, is to speak about China’s intentions Thursday at the Minor Metals and Rare Earths 2009 conference in Beijing.

Until spring, it seemed that China’s stranglehold on production of rare earths might weaken in the next three years — two Australian mines are opening with combined production equal to a quarter of global output.

But both companies developing mines — Lynas Corporation and smaller rival, Arafura Resources — lost their financing last winter because of the global financial crisis. Buyers deserted Lynas’s planned bond issue and Arafura’s initial public offering.

Mining companies wholly owned by the Chinese government swooped in last spring with the cash needed to finish the construction of both companies’ mines and ore processing factories. The Chinese companies reached agreements to buy 51.7 percent of Lynas and 25 percent of Arafura.

(Page 2 of 2)

The Arafura deal has already been approved by Australian regulators and is subject to final approval by shareholders on Sept. 17. The regulators have postponed twice a decision on Lynas, and now face a deadline of next Monday to act.

Matthew James, an executive vice president of Lynas, said that the company’s would-be acquirer had agreed not to direct the day-to-day operations of the company, but would have four seats on an eight-member board.

Expectations of tightening Chinese restrictions have produced a surge in the last two weeks in the share prices of the few non-Chinese producers that are publicly traded. In addition to the two Australian mines, Avalon Rare Metals of Toronto is trying to open a mine in northwest Australia, and Molycorp Minerals is trying to reopen a mine in Mountain Pass, Calif.

Unocal used to own the Mountain Pass mine, which suspended mining in 2002 because of weak demand and a delay in an environmental review. State-owned Cnooc of China almost acquired the mine in 2005 with its unsuccessful bid for Unocal, which was bought instead by Chevron; Chinese buyers tried to persuade Chevron to sell the mine to them in 2007, but Chevron sold it to Molycorp Minerals, a private American group.

A single mine in Baotou, in China’s Inner Mongolia, produces half of the world’s rare earths. Much of the rest — particularly some of the rarest elements most needed for products from wind turbines to Prius cars — comes from small, often unlicensed mines in southern China.

China produces over 99 percent of dysprosium and terbium and 95 percent of neodymium. These are vital to many green energy technologies, including high-strength, lightweight magnets used in wind turbines, as well as military applications.

To get at the materials, powerful acid is pumped down bore holes. There it dissolves some of the rare earths, and the slurry is then pumped into leaky artificial ponds with earthen dams, according to mining specialists.

The Ministry of Industry and Information Technology has cut the country’s target output from rare earth mines by 8.1 percent this year and is forcing mergers of mining companies in a bid to improve technical standards, according to the government-controlled China Mining Association, a government-led trade group.

General Motors and the United States Air Force played leading roles in the development of rare-earth magnets. The magnets are still used in the electric motors that control the guidance vanes on the sides of missiles, said Jack Lifton, a chemist who helped develop some of the early magnets.

But demand is surging now because of wind turbines and hybrid vehicles.

The electric motor in a Prius requires 2 to 4 pounds of neodymium, said Dudley Kingsnorth, a consultant in Perth, Australia, whose compilations of rare earth mining and trade are the industry’s benchmark.

Mr. Lifton said that Toyota officials had expressed strong worry to him on Sunday about the availability of rare earths.

Toyota and General Motors, which plans to introduce the Chevrolet Volt next year with an electric motor that uses rare earths, both declined on Monday to comment.

Rick A. Lowden, a senior materials analyst at the Defense Department, told a Congressional subcommittee in July that his office was reviewing a growing number of questions about the availability of rare earths.

China is increasingly manufacturing high-performance electric motors, not just the magnets.

“The people who are making these products outside China are at a huge disadvantage, and that is why more and more of that manufacturing is moving to China," Mr. Kingsnorth said.

A version of this article appeared in print on September 1, 2009, on page B1 of the New York edition.

Inside NYTimes.com

http://www.nytimes.com/2009/09/01/business/global/01minerals.html?_r=1

Information Researched By: Sister Anonymous

The reawakening of Afro-Argentine culture GlobalPost

Reviving Afro-Argentine culture

Anil Mundra August 21, 2009 10:00 ET

The reawakening of Afro-Argentine culture

Descendants of slaves are starting to assert their identity but it's not easy in South America's whitest country.

By Anil Mundra

Published: August 30, 2009 09:15 ET
Updated: August 31, 2009 11:45 ET

BUENOS AIRES — "Liberty has no color" read the signs held outside a Buenos Aires city courthouse. "Arrested for having the wrong face," and "Suspected of an excess of pigment," said others. And more to the point: "Enough racism."

A black street vendor was allegedly arrested without cause or proper procedure earlier this year, prompting this August hearing of a habeas corpus appeal. But leaders of the Afro-Argentine community say this moment goes beyond any particular man or incident, calling it a watershed case that brings to trial the treatment of blacks in Argentina.

“It's not about this prosecutor or that police officer, but rather an institutionally racist system," said Malena Derdoy, the defendant's lawyer.

Argentina is generally considered the whitest country in South America — 97 percent, by some counts — possibly more ethnically European than immigrant-saturated Europe. There was once a large Afro-Argentine presence but it has faded over the epochs. Now, for the first time in a century and a half, Argentine descendants of African slaves are organizing and going public to assert their identity.

They're winning eyes and ears outside their community, and there's a burgeoning corpus of films and books exploring the obscured questions of their history and current status. But after many generations of Argentine society's often willful denial of their very existence, even apparently simple demands like inclusion in the national census prove complicated.

“We've been exiled from the collective memory of Argentina,” said Juan Suaque, a seventh-generation descendant of Argentine slaves. “It's as if you pass someone in the street and you have to explain your whole life, what and who you are.”

It's past midnight at the jubilant one-year anniversary party of Associacion Misibamba, the leading Afro-Argentine cultural organization of which Suaque is president. The gathered crowd practices Afro-Argentine “candombe” music and dance as they have for centuries. Women and girls of all ages gyrate the classic gesture — hand to hip, hand to forehead — encircled by the frenetic syncopation of conga drums.

This classic art form has been gaining in popularity in recent years, among white Argentines at least as much as black ones. Associacion Misibamba recently performed their candombe in a major feature film, a period piece set in 19th-century Buenos Aires. That period was a time — a distant memory just now being reawakened — when African expressions were an everyday part of Argentine life.

At the beginning of the 1800s, black slaves were 30 percent of the population of Buenos Aires, and an absolute majority in some other provinces. The first president of Argentina had African ancestry, and so did the composer of the first tango. Even the word “tango,” like many other words common in the Argentine vocabulary, has an African root; so do many beloved foods, including the national vices of the asado barbecue and dulce de leche.

The abolition of slavery was a slow process that spanned the better part of the 19th century. At the same time, under the government's explicit and aggressive policy of whitening the race — to replace “barbary” with “civilization,” in the famous phrase of the celebrated president Sarmiento — Afro-Argentines were inundated by European immigration, the largest such influx in the Americas outside of the United States. Blacks had dwindled to only 1.8 percent of Buenos Aires by the 1887 census, after which their category was replaced with more vague terms like “trigueno” — “wheaty.”

Page 2 of 2

“It's part of Argentine common sense that there are no blacks, that their entire culture had disappeared toward the end of the 1800s,” said anthropologist Pablo Cirio. “That's all a lie.”

A 2005 pilot census estimated that about 5 percent of the national population has African ancestry — about 2 million people. The study found that population to be worse-off by health and socioeconomic indicators than the rest of Argentina, as has presumably been the case since slavery.

Unlike the census of 1887, performed in a political atmosphere that was eager to efface the African presence in Argentina, this survey tried to detect any African ancestry in a household, whether or not its members appeared black. For that reason, the survey's architect and community activists have preferred the term "Afro-descendant" to the narrower "black."

The survey was performed with help from the national census bureau and World Bank funding, at the urging of local Afro-Argentine activists who hoped to have the “Afro-descendant” category re-inserted into the Argentine census in 2010 and count themselves as a distinct segment of the populace after a century missing.

Soon afterward, DNA tests of blood samples in several Buenos Aires hospitals bolstered the pilot census' result with a very similar percentage of genes traceable to Africa. Moreover, a much higher number — about 10 percent — was obtained by testing mitochondrial DNA, which traces maternal ancestry. This is consistent with the historical conjecture that many black men were lost after being sent to the frontlines of 19th-century wars, and Afro-Argentines assimilated into the white population when the remaining women mixed with the hordes of European males who had come to Argentina to work.

But now the census initiative seems to have stalled. There are fatal questions about its potential validity and value as a measurement tool in a society where African roots have been so long hidden. Many Argentines aren't aware of black ancestors they may have, and the survey's researchers noted the difficulty in getting people to self-identify as Afro-descendants when the label has always carried such a strong stigma.

The pilot census had to be preceded by aggressive public information campaigns in the sample areas, in order to sensitize households to the concept of African ancestry and give them time to research their family trees. But most agree that without such a campaign and trained researchers giving face-to-face interviews, the usual government census wouldn't accurately reflect the Afro-descendant population in Argentina.

Anthropologist Cirio notes that, faced with the hostility of their surrounding society, “the party most interested in making blacks invisible have been blacks themselves.” Those who maintained African cultural traditions decided, since the end of the 19th century, to conceal these traditions from the public eye. “They did this not to forget their past, but to preserve it,” he said, adding that Associacion Misibamba is one of the first organizations to “break the
silence.”

In some cases the cultural insulation has worked and enabled the reflorescence happening today. But more commonly, the effect has been a large-scale amnesia in Argentine society. “Any of us could be Afro-descendants, perhaps without knowing it,” said Cirio with an ironic smile.

Posted by Anil Mundra on September 1, 2009 10:15 ET

Hello Mandela, thank you for your comment.

You can find Associacion Misibamba and the Movimiento Afrocultural at
http://www.misibamba.org
http://bakongocandombeafroargentino.blogspot.com/
http://movimientoafrocultural.blogspot.com/

Sunday, August 30, 2009

18 Common Phrases to Avoid in Conversation

What Not to Say During a Job Interview

Don’t say: “My current boss is horrendous.”
Why: It’s unprofessional. Your interviewer might wonder when you’d start bad-mouthing her. For all you know, she and your current boss are old pals.
Instead say: “I’m ready for a new challenge” or a similarly positive remark.

Don’t say: “Do you think I’d fit in here?”
Why: You’re the interviewee, not the interviewer.
Instead say: “What do you enjoy about working here?” By all means ask questions, but prepare ones that demonstrate your genuine interest in the company.

Don’t say: “What are the hours like?” or “What’s the vacation policy?”
Why: You want to be seen as someone who focuses on getting the job done.
Instead say: “What’s the day-to-day like here?” Then, if you’ve really jumped through every hoop and time off still hasn’t been mentioned, say, “Can you tell me about the compensation and benefits package?”

Expert: Mary Mitchell, president of the Mitchell Organization, a corporate-etiquette training firm in Seattle, and author of The Complete Idiot’s Guide to Etiquette (Alpha, $19, amazon.com).

By Kristyn Kusek Lewis

http://www.realsimple.com/work-life/etiquette/sticky-situations/common-phrases-avoid-conversation-10000001698308/page3.html?xid=yshin-rs--conversation4

What not to say: Avoid these common conversational pitfalls

What Not to Say About Someone's Appearance

Don’t say: “You look tired.”
Why: It implies she doesn’t look good.
Instead say: “Is everything OK?” We often blurt the “tired” comment when we get the sense that the other person feels out of sorts. So just ask.

Don’t say: “Wow, you’ve lost a ton of weight!”
Why: To a newly trim person, it might give the impression that she used to look unattractive.
Instead say: “You look fantastic.” And leave it at that. If you’re curious about how she got so svelte, add, “What’s your secret?”

Don’t say: “You look good for your age.”
Why: Anything with a caveat like this is rude. It's saying, "You look great―compared with other old people. It's amazing you have all your own teeth."
Instead say: “You look great.”

Don’t say: “I could never wear that.”
Why: It can be misunderstood as a criticism. (“I could never wear that because it’s so ugly.”)
Instead say: “You look so good in skinny jeans.” If you slip, say something like “I could never wear that…because I wasn’t blessed with your long legs.” Follow these tips to shop smart for your own body type.

Expert advice from Clinton Kelly, cohost of the TLC show, What Not to Wear.

What Not to Say in the Workplace

Don’t say: “That’s not my job.”
Why: If your superior asks you to do something, it is your job.
Instead say: “I’m not sure that should be my priority right now.” Then have a conversation with your boss about your responsibilities. In the past year, the rules of the workplace have changed. Learn how to shine at work in the new economy.

Don’t say: “This might sound stupid, but…”
Why: Never undermine your ideas by prefacing your remarks with wishy-washy language.
Instead say: What’s on your mind. It reinforces your credibility to present your ideas with confidence.

Don’t say: “I don’t have time to talk to you.”
Why: It’s plain rude, in person or on the phone.
Instead say: “I’m just finishing something up right now. Can I come by when I’m done?” Graciously explain why you can’t talk now, and suggest catching up at an appointed time later. Let phone calls go to voice mail until you can give callers your undivided attention.

Expert advice from Suzanne Bates, president and chief executive officer of Bates Communications, an executive-training firm in Wellesley, Massachusetts, and author of Speak Like a CEO.