Australia to take time to probe Rio-Chinalco deal

The Australian government said on Monday it would take its time before deciding on China's planned $19.5 billion investment in Anglo-Australian miner Rio Tinto Ltd/plc (RIO.AX) (RIO.L), sending Rio shares lower. State-owned Chinalco, China's top aluminium maker, agreed last month to pay $12.3 billion for stakes in Rio's key iron ore, copper and aluminium assets and $7.2 billion for convertible notes that would double it equity interest in Rio to 18 percent. The deal needs Australian foreign investment approval, but some Australian politicians are wary of handing stakes in some of the country's most important mines to China, which is Australia's biggest export customer. They argue that it would be in China's interests to keep Australian export prices low. "This is a very significant decision," Australian Treasurer Wayne Swan told a press conference called to discuss the domestic economy. "The government will take its time to evaluate it in great depth and detail. It's very important that we get this right in the national interest." Rio shares were down 5 percent in morning trade at A$44.82, faring worse the wider market which was down 2.1 percent. One dealer blamed the fall on the prospect of a lengthy decision-making process over foreign-investment approval. Swan is expected to hold talks this week with Chinalco's new president, Xiong Weiping, who is visiting Australia to lobby the government in support of the Rio transaction, which would enable Rio to pay down its $39 billion debt load. That debt was accumulated when Rio bought Canadian firm Alcan in 2007, near the top of the commodities boom. Source: Reuters