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China slams Chinalco rejection
By China correspondent Stephen McDonell

Posted 9 hours 57 minutes ago
Updated 6 hours 22 minutes ago


The decision has 'caused strong reactions from the iron and steel industry' (Getty)

Audio: Australia set for fence mending in China (The World Today) Related Story: Chinalco deal falls over as BHP steps up Related Story: BHP, Rio clinch $7.2b iron ore deal Related Story: Rudd reassures Chinalco over failed merger Increasingly strong criticism is coming from Australia's second-largest trading partner China to the merger of BHP Billiton and Rio Tinto and the subsequent rejection of a major Chinese investment.

According to Beijing, the rejection of Chinalco's investment in Rio Tinto has "caused strong reactions" not only from China's iron and steel industry but also the general public in China.

The Government comments followed a strongly worded attack from the Chinese Iron and Steel Association.

Western Australian Premier Colin Barnett has the busy job of bridge building.

He will be travelling to China next month to try and reassure investors there that his state is still open for Chinese investment.

When Rio Tinto rejected a major investment from China's Chinalco late last week, in one sense, it let the Australian Government off the hook.

It meant there would be no need for a decision as to whether this bid by a Chinese Government company to buy up a large chunk of a key mineral resource was in Australia's interests or not.

But now a new headache has emerged for Rudd Government. That is how to smooth things over with a China that is clearly not happy with this result.

If there was any doubt about this, it disappeared last night when Government spokesman Qin Gang explained Beijing's feelings on the matter at the Foreign Ministry press conference.

"Chinalco and Rio Tinto had reached a cooperative agreement which had injected the vigour of economic cooperation between China and Australia," he said.

He went on to say "the purpose and principle were mutually beneficial".

"Now the decision made by Rio Tinto, I believe, has not only very much disappointed the related Chinese company but has caused strong reactions from the iron and steel industry and also the general public in China."

He did not elaborate on what these strong reactions would mean for the general public.

The ABC asked him specifically what the Government thought about the merging of BHP Billiton and Rio Tinto operations.

"I have nothing to say about the commercial cooperation between these two companies," he said.

"But we do hope that the market price of international minerals remains stable and that the mineral resources market can be fully open."

The General Secretary of the China Iron and Steel Association, Shan Shanghua, was not beating around the bush about the BHP Rio deal.

"The merger of Rio Tinto and BHP has a strong colour of monopoly," he said.

"The Chinese iron and steel enterprises strongly oppose it."

For China the bottom line is the price of iron ore.

If it has to start paying more than it thinks is fair then this merger will be blamed again and again.

Either way, if China and Australia were in a relationship, they would not be holding hands in public at the moment.

http://www.abc.net.au/news/stories/2009/06/10/2593792.htm

Cheers,B