The president of Chinalco, Xiao Yaqing, has given the strongest indication to date that the state-backed Chinese company is uneasy about BHP Billiton's $US147 billion (AUS$157 billion) bid for Rio Tinto.
In an interview with
Hong Kong's South China Morning Post, Mr Xiao said he did not think the "whole world" would consent to or support a resources company the size of a combined BHP-Rio. "A firm that owns too many resources is not good for the world," he said. "People do not want to see a company dominate the market in any industry."
Earlier this year, Chinalco and the
USaluminium company Alcoa bought 9 per cent of Rioin a $US14 billion raid on its London-listed shares, making it the Anglo-Australian miner's largest shareholder. BHP's bid is contingent on obtaining a 50.1 per cent stake in Rio.
At the time, Chinalco said it would not seek a
Rioboard seat or interfere in the management of the company. But Mr Xiao told the Post the investment in Riowould allow Chinalco to "know more about its management style and its strategy" and to "have more say in its development strategy". He said Chinalco could become the world's largest aluminium producer within three to five years, and in the longer term it aimed to become one of the world's largest companies.
Mr Xiao said Chinalco was interested in joint ventures with large Western mining companies. In recent months, BHP,
Rioand Anglo American have all demonstrated a willingness to work with their Chinese counterparts.
Mr Xiao said Chinalco would welcome a co-investor in its $US3 billion Aurukun bauxite mining and alumina refining project in
. The Aurukun project borders Rio's Weipa bauxite operations, and Queensland Rio's aluminium chief executive, Dick Evans, last month indicated his company was open to a possible joint venture. Mr Xiao said foreign companies had expressed interest in taking a strategic stake in Chinalco, but no "concrete decisions" had been reached. Alcoa last year sold its stake in Chinalco's Chalco.
In recent months, Chinese companies have taken a more proactive approach to investing in Australian resources. The West Australian iron ore miner
Midwestlast month agreed to a raised $1.3 billion bid from Sinosteel after rejecting an earlier hostile approach. Mr Xiao said Sinosteel's bid was "a good thing" since it demonstrated Chinese companies had learnt how to launch a hostile takeover. "It's just market behaviour."
Last week BHP's chief executive, Marius Kloppers, said he expected Chinese investors to buy a stake at some point.
♠ Posted by Emmanuel in China at 5/13/2008 02:21:00 AMA few months ago, I featured an article on Chinese state-controlled company Chinalco buying a 9% stake in Australia's Rio Tinto. If you're looking for an example of geopolitical strategy by the PRC, this would have been it. Rio Tinto has been the subject of a £75B-some hostile takeover bid by fellow Australian mining giant BHP Billiton, the world's largest mining concern. Fearing this combination would exert excess monopolistic power over the supply of key minerals such as iron ore, the PRC threw in the monkey wrench of the Chinalco investment. While visiting the Sydney Morning Herald, that newspaper notes that the leadership of Chinalco admits as much, to no one's real surprise: