The deal: Aluminum Corp. of China, known as Chinalco,
would acquire assets and stock in debt-laden mining giant Rio Tinto plc (NYSE:RTP) for $19.5 billion.
The pols: Prime Minister Kevin Rudd (pictured), Australian Parliament Opposition Leader Malcolm Turnbull and Australian Treasurer Wayne Swan.
The worry: Will China gain too much control of Australian resources while continuing to block inbound M&A?
On Friday in Sydney,
Turnbull voiced his opinion on the deal saying it should not be accepted in its current form and accused Rudd of being too focused on China. He even went on to say, as noted by Reuters, that "the object of the Chinalco acquisition is plainly strategic. This will give Chinalco, and hence the Chinese government, the seat of greatest influence and access to information about production, costs, pricing and marketing strategies of our second-largest resource company."
TheAge.com has
Swan's rebuttal: " Turnbull is playing opportunistic party politics with one of our most important trade relationships. The saddest thing about Turnbull's speech today is that not even he believes it. Turnbull and the Liberals were becoming increasingly desperate."
The Chinalco deal was approved by the Australian Competition and Consumer Commission, but awaits approval from Swan and the Foreign Investment Review Board. The ACCC doesn't think Chinalco will be able to manipulate iron ore prices -- offering Chinese steelmakers prices less than it would the competition -- with its 18% stake.
Swan recently approved China's Hunan Valin Iron & Steel acqusition of 16.5% of Australian iron ore miner Fortescue Metals Ltd. for $769 million; and China Minimetals Corp.'s $1.8 billion cash offer for assets of Melbourne's Oz Minerals Ltd.
Interestingly enough on Friday, China Non-Ferrous Metal Mining Co. Ltd. signed a $505 million deal to
take a controlling stake in Sydney-based rare earths miner Lynas Corp. Ltd.
And in other major Aussie news, Rudd recently announced
ambitious plans to create a government-owned entity to establish a national broadband network that would cost taxpayers $31 billion over eight years. Turnbull had some not-so-favorable comments for that move as well. -
Baz Hiralal
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