01 Oct 2009
Oct. 1 (Bloomberg) -- Barnaby Joyce, the Australian lawmaker who led opposition to Aluminum Corp. of China's planned $19.5 billion investment in Rio Tinto Group, said the nation should be prepared to block takeovers from state-owned entities.
"I have a major problem with state-government organizations involving themselves in the commerce of a sovereign nation," Joyce, opposition Nationals party senator, said today by phone from Tamworth, New South Wales.
Investments from Chinese companies have faced scrutiny from Australia as China, its No. 2 trading partner, accelerates takeovers to secure resources. The regulator will assess two bids worth more than a combined A$6 billion ($5.3 billion) from Chinese state-owned Sinochem Corp. and Yanzhou Coal Mining Co. for Australian companies made in the past two months.
Regulators should "first and foremost have the long-term interests of our nation at heart and not the convenient decision that avoids political ramifications of saying the word no," Joyce said.
Chinese and other overseas investors in Australia's major resource companies should limit proposed stakes to no more than 15 percent to improve their chance of winning approvals, Patrick Colmer, director of the Foreign Investment Review Board, which regulates overseas investment, said last month.
The board blocked an initial bid from state-owned China Minmetals Corp. for OZ Minerals Ltd. in March on national security concerns and last week barred China Non-Ferrous Metal Mining (Group) Co. from buying a majority stake in Lynas Corp. The board has processed about 90 proposed Chinese investments in Australia valued at about A$34 billion in the past 18 months, according to Colmer.
Extra Scrutiny
The bigger of the two pending bids, Yanzhou Coal's A$3.5 billion offer for Felix Resources Ltd., is for a coal producer. Sinochem has made an initial A$2.8 billion offer for buy Nufarm Ltd., Australia's biggest supplier of farm chemicals,
Joyce, who aired television ads in Australia opposed to Aluminum Corp.'s planned investment in London-based Rio, said investments in mineral projects deserved extra scrutiny. Rio, which has a third of its assets in Australia, later dropped the deal with Aluminum Corp. in favor of a share sale and a joint venture with BHP Billiton Ltd.
"Minerals in the ground are the source of Australian wealth," Joyce said, adding it's more serious "when another nation gets ownership of that sort of fundamental strategic long-term asset in our nation."
Nufarm Chief Executive Officer Doug Rathbone said yesterday the company isn't aware of any Australia national interest grounds to block the offer from Sinochem.
The offer for "Nufarm shows that the Chinese government and the communist government in China, is now involving themselves in the commercial market place," Joyce said. "Just because they do it elsewhere doesn't mean we shouldn't be cautious about the outcome."
