Turnbull attacks Chinalco's plan for Rio

Looks have to postpond the Rio's share purchasing ...where would u go???

Chinese Econ now is back to its upturn, couldn't say it successfully stepped out of the global trading retreat, however, internal consumption might be another way to boom current econ. During the recession, one good thing about Chinese market is that the government is still taking control of the major biz sectors especially in areas of resources & major manufacturing factories, here of course, other than Bazil, Australia is acting as the major trading partner who are supplying huge amount of mining raw materials, during the last few years, thanks to the booming iron & construction industries, export price has kept climbing sharply, but would this situation could ever come back if Chinese government controlled the buying end??? However, how can Rio survive in this super hard time without selling shares/mining sites to Chinalco? Conflict of interest...long term/short term profit...Rio could not affort another mistake, shareholders' pockets have becomed thin enough during 2008.

Rio, you let me succeed once, can I expect another? Or maybe BHP is safer for long term saying???

Artical by Peter Smith in Sydney
Published: May 2 2009

Malcolm Turnbull, the former Goldman Sachs executive who last year became leader of Australia's federal opposition, has launched a stinging attack on Chinalco's proposed $19.5bn investment in Rio Tinto, the Anglo-Australian mining group.

Mr Turnbull has called on Canberra to reject the controversial deal, the largest investment ever undertaken by a Chinese company, because it fails to meet Australia's national interest.
The surprise intervention by Mr Turnbull, the most senior politician yet in Australia to oppose the deal, comes as the country's Foreign Investment Review Board enters the final six weeks of its assessment period on the tie-up between the Chinese metals company and Rio.

Mr Turnbull said he had three major concerns, including that Chinalco as a state-owned business is part of the Chinese government and that there were conflicts of interest where a "major purchaser of our commodities" also had a position of influence and access to information in the operation of a leading producer of the same commodities.

"Third, there is the matter of mutuality. There is no prospect that an Australian or any foreign company would be able to acquire a stake of this kind in a major Chinese resource company - not least because they are all state-owned," he said.

Canberra last year approved Chinalco acquiring up to 14.99 per cent of Rio's London-listed shares. However, Chinalco is proposing to pay $7.2bn for convertible bonds that would lift its stake in the dual-listed mining group's combined share register from 9 to 18 per cent. Chinalco is also planning to pay Rio $12.3bn for minority stakes in some of the mining group's best operations. These include the Hamersley iron ore operations in Western Australia; the Escondida copper mine in Chile; and its Australian aluminium division.

Mr Turnbull noted that Chinalco would also have the power to transfer those stakes to another Chinese enterprise. "The deal therefore is, for all practical purposes, between Rio and the government of China itself," he said.

Mr Turnbull's comments sparked a strong reaction from Wayne Swan, Australia's treasurer. Mr Swan has the power to veto the deal or demand changes and conditions irrespective of FIRB's recommendations.

"The saddest thing about Mr Turnbull's speech today is that not even he believes it," Mr Swan said.
Some of Mr Turnbull's comments echo those of Barnaby Joyce, leader of the opposition National party in Australia's upper house, the Senate. In a privately funded TV advert in March, Mr Joyce said: "The Australian government would never be allowed to buy a mine in China, so why would we allow the Chinese to buy and control a key strategic asset in Australia."

Source: FT.com