The purported catch here is that Oz Minerals' most lucrative mine is located inside one of Australia's weapons testing ranges, the Woomera Prohibited Area. I simply do not think this is an insurmountable difficulty as it is not especially difficult to agree with Chinese investors that transport from the mining site to the main road not veer off track. Getting blown up by munitions testing seems to be a pretty good deterrent against wandering around. Plus, it's fairly easy to monitor activity on flat desert lands from a long distance. Hence, I have no choice but to cry foul. From the Financial Times:
The Australian government has blocked a A$2.6bn (US$1.8bn) recommended bid by China’s Minmetals for Oz Minerals on the grounds that the mining group’s flagship mine is located in a military zone.And it's not over yet as there's, geez, a third Sino-Aussie deal endangered along similar grounds:
Wayne Swan, Australia’s treasurer, said “alternative proposals” would be considered from the Beijing-based metals group but it could not approve the deal if it included Oz’s Prominent Hill copper and gold mine, located in the Woomera Prohibited Area in South Australia. “It is not unusual for governments to restrict access to sensitive areas on national security grounds,” Mr Swan said.
Mr Swan’s surprise decision will fuel speculation Canberra may also block Chinalco’s controversial plan to invest $19.5bn in Rio Tinto, the Anglo-Australian mining group. Australia’s Foreign Investment Review Board is assessing the deal by the Chinese aluminium producer on “national interest” grounds, which includes investments made by state-backed entities.
Blocking the deal also threatens Oz’s survival. The miner, which had already warned it risked bankruptcy without the Minmetals takeover, is locked in talks with bankers owed A$1.3bn to extend debt repayments beyond March 31. The Woomera Prohibited Area includes a weapons testing range that Mr Swan said made a “unique and sensitive contribution to Australia’s national defence...An important part of this [national interest] assessment is whether proposals conform with Australia’s national security interests, in line with principles that apply to foreign government related investments,” he said.
As well as deliberating on Chinalco-Rio, the regulator is examining Hunan Valin Iron and Steel of China’s planned A$1.2bn investment in Fortescue Metals, Australia’s third biggest iron ore group.My broader point is this: developed countries keep complaining that China is propping up its currency artificially by buying US Treasuries and other reserve assets. Fine. However, when the PRC then tries to diversify into other things it has clear use for such as ensuring a steady supply of raw materials, countless roadblocks are thrown in its way. It always returns to global economic imbalances: you cannot have it both ways by telling the Chinese "don't buy debentures" and then "don't buy equity stakes" when they try to diversify.
Hey buddy, this is free trade. If you keep running external deficits (like Australia), then you have no choice other than to accept offsetting capital inflows. You can try and be a Robinson Crusoe-style autarky, but North Korea is not a particularly shining model of development. And some people still wonder why the Chinese are upset...