The Foreign Investments Review Board is currently assessing the application by Chinalco to buy a controlling stake in Rio Tinto. Apparently the decision has been delayed 90 days, which is causing a good deal of angst in the market. I’ve previously covered this issue here and here.
My basic argument against Chinalco owning Australian mines is that the deal would be inconsistent with Australia’s approach to removing government control and ownership of business enterprises. Both sides of Australian politics generally accept that private enterprise, not government, should run businesses. Hence the long and at times painful privatisation process supported by both main parties – until T3. To turn around and allow a foreign government to start buying up Australia’s key strategic assets would run counter to the long held principle of separating private enterprise from political interference.
There is also the irony of allowing the Chinese government the privilege of owning Australia’s key strategic assets – with the privileged information that would come with ownership – when the Australian government is not extended the same privilege in China. As pointed out by Senator Joyce:
“The Australian Government would never be allowed to buy a mine in China,” Senator Joyce says in one advertisement entitled Keep Australia Australian.
“So why would we allow the Chinese Government to buy and control a strategic asset in our country?
….Senator Joyce also rails against Minmetal’s bid for OzMetals.
“Both Chinese companies are owned and controlled by the Chinese Government.”
I have the inside word that Chinalco officials are already touring Rio Tinto operations, as if they own the entire corporation. They may be getting ahead of themselves. I would not be surprised if Swan rejects the deal. Approving the deal would result in a massive public back lash and rightly or wrongly, the public would perceive Rudd as Beijing’s man.