BHP reportedly blocked China's Rio Tinto bid

By Zhang Wen

BHP Billiton lobbied Australia last year to stop a $19.5-billion investment in Rio Tinto Group proposed by Aluminum Corp of China, the Sydney Morning Herald reported Thursday, citing a former Australian government official.

"E-mails from BHP were circulating at the highest levels, copied to ministers' offices, about all the 'China Inc' stuff," the report quoted Stephen Joske, a former Treasury official who left Canberra in July last year, as saying.

Joske was previously an advisor to former treasurer Peter Costello, the newspaper said. He also pointed out that private talks had been going on between BHP chairman Don Argus and Australian Prime Minister Kevin Rudd at the Lodge in Canberra.

China Aluminum Corp's $19.5 billion investment in one of the world's three biggest mining companies was one of the spotlight trades last year. However, the offer was eventually turned down. On June 5, Rio Tinto's board of directors canceled the agreement with China Aluminum Corp.

"The treasurer takes his decisions in the national interest, without regard to the political views" of a former staff member from the previous government, Bloomberg quoted a spokesman for Swan as saying Thursday, adding that Melbourne-based BHP spokesman Peter Ogden declined to comment.

"In the case of the sharp reduction in profits, (Rio Tinto) selling non-core assets is still hard in order to ease the financial crisis," an analyst said from Ernst & Young China, adding that Rio Tinto's financial situation has deteriorated again.

From August this year, Rio Tinto again showed interest in cooperating with China Aluminum, saying it was willing to negotiate on possible bauxite and alumina trade.

"It is still possible that Rio Tinto seeks help from China Aluminum," said He Rong-liang, an analyst from Distribution Production Promotion Center. "Therefore, China Aluminum will probably wait for the best time."

Earlier, a source close to BHP told the Sydney Morning Herald, "It was Rio's decision to walk away, not the government's." But since then a long list of Chinese investments in Australia has been delayed, discouraged or rejected by the Australian government.

According to the newspaper, just in recent weeks it has rejected two Chinese bids and instructed a number of other companies to resubmit their applications.

Agencies contributed to this story

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