SYDNEY (AFP)--Australia's government on Saturday raced to
reassure China that miner Rio Tinto's decision to walk away from a
US$19.5-billion investment by Beijing wasn't a political move.
Rio Tinto announced Friday it was pulling out of the deal that
had sparked political and shareholder opposition and would instead
raise capital from existing shareholders and forge a joint venture
with arch rival BHP Billiton.
"It's a commercial decision that has been taken by the
companies," Australian Treasurer Wayne Swan told state radio on
Saturday, adding that the move wouldn't harm Chinese-Australian
business ties.
"This has been taken completely independently from the
government," he said.
"Chinese investment is welcome in this country, I have made that
clear with the Chinese, as has the prime minister," he added after
Rio Tinto's decision to scupper its agreement with Chinese
state-owned aluminum miner Chinalco.
Rio Tinto's announcement saved the government from having to
make a politically sensitive decision on whether to grant
regulatory approval to the deal, a decision that would have had to
be made within the next week.
The landmark deal between Chinalco and the debt-laden
Anglo-Australian company would have marked the largest Chinese
investment abroad and the largest foreign investment in
Australia.
Prime Minister Kevin Rudd held a hastily arranged meeting with
Chinalco Chairman Xiong Weiping late Friday night during which he
also stressed that Rio Tinto's decision was its own.
"The prime minister explained that Australia welcomed foreign
investment," a spokesman for Rudd was quoted as telling the Sydney
Morning Herald.
Asked whether the collapse of the Chinalco investment would
anger the Chinese, Rudd stressed that the decision was taken by
Rio, not his government.
"And I think it is very important that our friends in China
recognize that fact," he said.
Xiong had been in Australia in a bid to seal a modified deal
with Rio Tinto after it and Chinalco earlier agreed to change some
of the terms as the economic landscape shifted.
Rio Tinto shareholders and opposition politicians had spoken out
against the Chinalco deal saying it risked allowing China -
Australia's main resources customer - to control the pricing of the
minerals it buys.
Rio Tinto opted instead to walk away from the deal and form an
iron ore joint venture in Australia's mineral-rich Pilbara region
with rival BHP and to raise capital through a US$15.2-billion
rights issue.
Xiong on Friday issued a statement expressing frustration with
Rio Tinto's decision and warned that Chinalco, which remains Rio
Tinto's largest shareholder, would keep a close eye on the rights
issue and BHP joint venture.
"We are very disappointed at this outcome," Xiong said. "We had
maintained an extremely flexible and constructive attitude in our
consultations with Rio Tinto."
The head of Australia's China Business Council, which promotes
trade and business ties between the two countries, said Beijing may
hold Canberra responsible for Rio Tinto's decision to back out of
the Chinalco deal.
"Beijing may have some disincentive views and some
disappointment with the Australian government over the delays in
the FIRB [Foreign Investment Review Board] approval process, which
may be seen to have allowed this deal to have collapsed," he told
state radio.