Pechiney's Loss Likely To Be China's Gain

The state government of Queensland in Australia ordered French group Pechiney to
relinquish its mining lease on Cape York, creating an opportunity for China to obtain the
mine. The Queensland government said that the mine contains US$17.6 billion in
unexploited bauxite. China has expressed interest in the mine, which would enable it to
make major inroads into Australia’s alumina industry.

Pechiney had controlled Cape York’s Arukun
reserves for 28 years. Chinese President Hu Jintao, in his upcoming visit to Cairns, is
expected to discuss the Arukun reserves with the Queensland government. This is the first
time that Queensland has terminated a mining lease held by a foreign company.