SHANGHAI, China — After weathering the collapse of a $19.5 billion deal in 2009 and the arrest of four executives, Rio Tinto Group did what is done in China to court better fortune: It bought a jade horse.
Standing almost 4 feet high, the statue cut from the semiprecious gemstone commands a prime view of Shanghai from the company’s office on the 40th floor of the Wheelock Square building. It’s meant to help avoid any repeat of the rocky relationship the world’s second-biggest mining company has had with China, its largest customer and shareholder.
“When we designed this office, we asked a feng shui master to give us some guidance” and he said it was very important to have a jade horse in a pool of water, said Ian Bauert, China managing director of London-based Rio. “So the good qi comes in, the good spirit comes in to recirculate and makes us a prosperous and happy company in China.”
While Rio has lost share to archrival BHP Billiton in China since the trouble welled up in 2009, it nevertheless increased Chinese sales 72 percent to $19.5 billion in the three years through June 30. BHP boosted Chinese sales 119 percent to $21.6 billion in the period.
Since the fallout from 2009, the company has “improved its position substantially,” said Tim Schroeders, who helps manage $1 billion at Pengana Capital Ltd. in Melbourne, Australia, including Rio shares. He credited Rio’s efforts without commenting on any potential luck from the horse, which was fashioned out of white jade.
Rio, the world’s second-biggest iron-ore exporter, competes with BHP and Brazil’s Vale SA to supply China’s $82 billion-a-year market for the steelmaking material. With stakes that high, any help Rio can get to maintain smooth relations with China’s government is welcome, after the jailing of company executive Stern Hu two years ago and the collapse of a $19.5 billion investment deal in 2009.
“Competition for Chinese market share is getting more fierce,” said Xu Xiangchun, chief analyst with researcher Mysteel.com. “Having a good relationship with the Chinese government and steelmakers is critical for the miners.”
The arc in Rio’s fortunes in China dates to 1973, when it says it became the first foreign company to supply iron ore to China. Since then, Rio has shipped more than 1 billion metric tons. China generated sales of about $20 billion in calendar year 2011, or 33 percent of Rio’s total, and almost double that of North America, its second-largest market.
Rio, BHP and Vale are jostling for an edge in supplying the world’s fastest-growing major economy with key commodities such as iron ore, copper and aluminum. By 2030, China will need to build 50,000 skyscrapers — equal to 10 New York Cities — and there will be 221 cities with populations of more than 1 million, compared with 35 in Europe today, according to estimates from the McKinsey Global Institute.
The running jade horse, designed by Beijing-based Taiwanese artist Huang Zhiyang, has a steel frame set with jade pieces and stands in a pool of water. In China, water is a symbol of wealth, and when spoken, the word has a similar sound to “cai,” a word for money or wealth.
Feng shui is a traditional Chinese method of arranging the human and social world in auspicious alignment with the forces of the cosmos, including qi and yin-yang, according to the Britannica Concise Encyclopedia.
On the feng shui master’s advice, the horse is located in water on the opposite side of the building overlooking the Jingan Temple, Bauert said. “He said it was very important.”
Front Section, Pages 12 on 12/02/2012