RE:Article from ReutersWhat JSJ would do if he was the owner of Rio versus what he can actually do with an eye to his shareholders and brokerage analysts and bond rating agencies are two different things. He has signalled his intended direction but current cashflows at Rio limit spending. Global slow growth and the long build-out time for Phase 2 give him lots of time yet.
He might prefer to spend more sooner while copper appears to be in a slump; his shareholders want clearer proof of global growth pushing a new copper price rise before committing to more copper assets, and they know they might have to pay a little more by waiting. From the point of view of TRQ it is not just a play on a takeout premium, it is also a fundamental call option on world and Chinese demand growth - the Americans have promised their middle class a major infrastructure economic stimulus package, if that comes to pass after November it will help China, Japan and the Eurozone as well. Dr. Copper will reprice if the patient shows greater activity.
Maybe a little premature speculative excitement among TRQ minority shareholders?
We have seen hurry up and wait as the tune played at OT before.
Patience, grasshoppers.
cg