Australia to study China-Rio deal's economic impact

CANBERRA, Feb 25 (Reuters) - Australia will look to safeguard revenues from its natural resources in evaluating a Chinese firm's plan to invest $19 billion in Anglo-Australian miner Rio Tinto, Treasury officials said on Wednesday. State-owned aluminium group Chinalco's plans include taking direct minority stakes in key assets from debt-laden Rio Tinto, including some of its biggest Australian iron ore and aluminium operations. The deal, which also includes doubling its equity interest in Rio Tinto to 18 percent, must be approved by Australia's Foreign Investment Review Board, with Treasurer Wayne Swan then having the right to approve or veto the deal, or to set conditions. In a rare insight into how officials from the secretive board approach major deals, Treasury Department officials said it was crucial to consider economic returns from big resource projects. "Natural resources are scarce. Their ultimate ownership is a national ownership," Richard Murray, acting head of Treasury's markets group, told a parliamentary hearing. "For foreign investment proposals, the return to the nation through revenue stream, and safeguarding that, is very important." Swan is advised by the board and must decide whether a foreign investment proposal is in the national interest. Patrick Colmer, Treasury's general manager of foreign investment and trade, said it was premature to comment on conditions that could be imposed on the Chinalco-Rio deal, and said every foreign investment application was confidential. But he said if conditions were to be applied, the government would consult with those involved. "If we were thinking about conditions, we would be consulting very closely with the proponents to first of all find out whether those conditions were feasible," Colmer said. "There is clearly no point in applying conditions that cannot be complied with." He said the national interest test was deliberately broad. "At the end of the day, the test we are looking at is whether or not any particular investment is contrary to the national interest. It is very broad, and intentionally so. "Certainly the issues around economic interest can cover a wide range of ground. And it is something that we do look at. "We look very carefully at what is the nature of the proposal, what is the nature of the target of the proposal, and how does that fit into the overall industry and how does that fit into the overall economy." (Reporting by James Grubel, Editing by Mark Bendeich) Keywords: RIO CHINALCO/AUSTRALIA (james.grubel@reuters.com; +612 6273 2730; Reuters Messaging: james.grubel.reuters.com@reuters.net)