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BHP Billiton Shares Rise on Fresh China Stake Talk

Chinese interests have approached a major Australian superannuation and investment fund to be their partner in a multi-billion-dollar swoop on 9 percent of BHP Billiton, The Australian newspaper reported.

CNBC.com

Under the terms of the proposed deal, the Chinese would take 4.5 per cent of BHP Billiton, while the other half would be split between the Australian fund and a global private equity investor, the paper said on it's Web site.

The move is an attempt by China to avoid the increasing sensitivity in Canberra to moves on Australian resources companies by Chinese state-backed entities, the report said without revealing the source of its information.

The newspaper report follows persistent market speculation that a state-controlled Chinese firm was building a stake in BHP, the world's biggest mining company.

Much of the speculation around BHP has centered on giant Chinese aluminum maker Chinalco, already the largest shareholder in Rio Tinto which BHP is seeking to acquire in a hostile all-share offer.

A source familiar with the matter told Reuters on Wednesday that Chinalco had no imminent plans to take a stake in BHP, and that the speculation was "just talk."

China is a key player behind the huge profits that BHP and smaller rivals are generating as its booming economy gobbles up raw materials from iron ore to oil. The latest speculation is the second time in a month that Chinese firms have been named as possible buyers of a stake in BHP.

Shares in BHP, the world's No. 1 miner, rose as much as 4.2 percent in early Sydney trade Friday to a record high, buoyed by this renewed speculation.

Chinese companies have stepped up investment in Australian miners as they search for stable supplies of iron ore, coal, nickel and other industrial staples in short supply at home.

The country sees its modern-day industrial revolution lasting decades, prompting it to take a longer view of metals prices and to spend sooner rather than later on securing steady supplies, according to analysts.