Chinalco President Lobbies Australia on Rio Stake
Aluminum Corp of China (Chinalco) will explain to Australian political leaders on Tuesday why it bought a 9 percent stake in Rio Tinto, in a move seen as an attempt to ease concerns may try to take over one of Australia's biggest companies.
Chinalco President Xiao Yaqing will meet senior ministers in Canberra, a day after saying that the $14 billion purchase in partnership with Alcoa was aimed at diversifying Chinalco's business beyond aluminum.
The stake purchase spurred speculation Chinalco may bid for Rio, which has spent the last three months fighting a takeover proposal from BHP Billiton pitched at $139 billion.
A takeover move by Chinalco would require the approval of the Australian government's Foreign Investment Review Board (FIRB).
That could pose a tricky problem for a government, which would be caught between a commitment to good relations with China, a major trading partner, and the loss of an iconic local company to a foreign, state-owned entity.
Chinese Foreign Minister Yang Jiechi also was expected to touch on the sale during meetings on Tuesday with Australia's prime minister, Kevin Rudd, and the foreign minister, Stephen Smith, also at Canberra's Parliament House.
Australian Treasurer Wayne, who would have to act on any FIRB advice, said on Monday that if he was required to make a decision, it would be made on "national interest considerations".
Australia in 2001 blocked an attempted takeover of Woodside Petroleum by Anglo-Dutch oil firm Royal Dutch/Shell on similar grounds.
Xiao told reporters in Sydney on Monday there were no immediate plans to buy more Rio stock.
Chinalco's 12 percent stake in Rio's London listing, giving it a holding of just over 9 percent in Rio's dual-listed entity, does not automatically require a FIRB review.
BHP has until Wednesday to declare a formal bid for Rio or refrain from pursuing a takeover for at least six months under a "put up or shut up' regulation imposed by Britain's Takeover Panel.
Xiao on Monday insisted the deal was more about extending state-controlled Chinalco's reach into diversified markets, such as iron ore and copper, where Rio is strong.
Chinalco lodged notification documents with FIRB last week and will this week hand over supplementary documents, after which FIRB officials can ask for responses from BHP, Rio and Alcoa.