Chinalco executives have flown back to Beijing angry about Rio Tinto's tie up with BHP Billiton. The junior mining sector in Australia sees it as an opportunity for China to invest its money into other mines.
ELIZABETH JACKSON: Rio Tinto's decision to link up with BHP might have left China disgruntled, but it's been welcomed by the rest of Australia's mining sector.
Scores of smaller companies are pinning their hopes on China now re-directing its billions into their projects.
But some are concerned that China might be more cautious about doing business with Australia from now on.
Di Bain reports.
DI BAIN: A team of Chinalco executives left Canberra for Beijing overnight, fuming about Rio Tinto's defection and disappointed they couldn't seal their $24 billion deal.
The state-backed aluminium company was once Rio Tinto's white knight when BHP Billiton made a takeover bid for the company. Now it's licking its wounds.
Duncan Calder heads up the WA division of the Australia China Business Council. He's regularly meets with Chinese officials to discuss investment in Australia and says his job may have just got harder.
DUNCAN CALDER: Beijing may have some disconcerted views and some disappointment with the Australian Government over the delays in the FIRB approval process, which may be seen to have allowed this deal to have collapsed.
DI BAIN: The Prime Minister, Kevin Rudd, met with Chinalco last night. He says he made it clear that decisions between Rio Tinto and Chinalco are commercial matters and he explained Australia welcomed foreign investment.
Instead of selling stock to Chinalco, Rio will ask its existing shareholders to buy $19 billion worth of shares. It will also join its lucrative iron ore business with long time Pilbara rival BHP Billiton.
The deal saves Rio from drowning in debt and it makes iron ore production easier and cheaper for BHP.
Mr Calder says the Australian-based iron ore miners have the whip hand over China.
DUNCAN CALDER: This may increase the combined marketing power of the entities and increase Chinese concerns that they may face another round of iron-ore high price increases in the future.
DI BAIN: Those on the negotiating frontline are hoping China will now see the value in Australia's other mineral companies.
George Jones heads up iron ore explorer Gindalbie Metals. He's been doing deals with China for decades and he thinks Australia's small resource projects stand to benefit.
GEORGE JONES: China would be bemused and disappointed with what's happened.
DI BAIN: Do you think this will encourage China to invest more in developing stranded and small iron ore deposits?
GEORGE JONES: I do think that. Not only small ones, I mean there's a lot of big ones that are not developed yet, and I would… I believe that China would… with what's happened would encourage them to get a move on with the development of these other assets, yes.
I think it's quite positive for the industry outside the majors.
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