Chinalco says Rio to blame for failed deal
CHINESE metals conglomerate Chinalco yesterday said Rio Tinto was to blame for the failure of the pair’s mega-deal – not the Australian government.
Australia had an “open and welcoming” attitude to its failed $19.5bn (£11.7bn) bid to invest in Rio Tinto, Chinalco President Xiong Weiping said yesterday.
The deal collapsed last week because of factors beyond Chinalco’s control, with disagreements on board seats and a convertible bond issue.
But Xiong suggested that Rio had turned its back on the deal despite Chinalco’s offer of several amendments after the terms were thrashed out in February.
Among the concessions, Chinalco would have accepted a lower stake in Rio than the original 18 per cent, given ground on the convertible bond, simplified the agreed marketing structure for iron ore and halved its proposed stake in Rio’s Hamersley iron ore mine from 15 to 7.5 per cent.
“We believe these were very significant concessions and amendments to the original transactions and they should have been sufficient to meet the requirements of both the shareholders and the Australian regulators,” Xiong told reporters at a briefing at Chinalco’s head office in Beijing.
But the sticking point was the failure to resolve the question of Chinalco’s representation on Rio’s board. But it did not blame Australia’s government, which has been under the investment spotlight because of its stringent process for accepting foreign investment.
“In the process of this transaction, Chinalco has also felt the open and welcoming attitude from the Australian government towards foreign investment, including from China,” Xiong said.
“China and Australia have established a good cooperative business relationship over the last few years. As a Chinese company, Chinalco hopes this relationship will last and further develop.”
Rio ditched Chinalco, at the cost of a $195m breakup fee, in order to team up with its fellow British-Australian miner BHP Billiton.
The two will form a joint venture in iron ore, linking up two of the world’s top three suppliers.