Australia approves Chinalco's stake in Rio Tinto

SYDNEY, Australia (AP) — Australia has approved Aluminum Corp. of China Ltd.'s stake in miner and takeover target Rio Tinto Ltd., Treasurer Wayne Swan said Sunday.

Swan said he approved the Chinese state-owned company's acquisition of up to 14.99 percent of the shares in Rio Tinto PLC, the London Stock Exchange-listed arm of Rio Tinto Group. The approval came after Aluminum Corp. of China, also known as Chinalco, bought the shares.

A 14.99 percent stake in Rio Tinto PLC equates to an interest of around 11 percent in the entire group, which includes the Australian-listed Rio Tinto Ltd.

Swan said he approved the purchase on the condition that Chinalco not raise its shareholding above 14.99 percent without receiving new government approval.

Chinalco also agreed not to seek to appoint a director for Rio Tinto PLC or Rio Tinto Ltd. as long as its holdings were below 15 percent.

"While Australia welcomes foreign investment in our economy, we will carefully examine national interest issues where these arise in relation to foreign sovereign ownership," Swan said.

"I have determined that the undertakings agreed with Chinalco are acceptable for protecting the national interest in this matter," he added.

Chinalco issued a statement Sunday saying it welcomed the government's decision.

Chinalco paid about 15 billion Australian dollars ($13 billion) for its stake in Rio Tinto PLC, the biggest ever offshore investment by a Chinese company.

Rio Tinto is currently attempting to fend off a A$163 billion ($142 billion) takeover proposal from the world's largest miner, Australia-listed BHP Billiton Ltd.

Chinalco has said its move on Rio Tinto was a strategic investment.

The move stoked speculation that it was prompted by Beijing to block BHP Billiton's plans for Rio Tinto due to concerns about competition and pricing.

The Australian Competition and Consumer Commission approved the Chinalco investment in February.

The ACCC said Friday that a merger between BHP Billiton and Rio Tinto may raise competition concerns in the global iron ore market.