A leaked US cable shows that mining giant BHP Billiton lobbied the Australian government hard to bring down a proposed USD 19.5 billion deal between its rival Rio Tinto and China's Chinalco.
Spokesmen for BHP and Rio Tinto refused to comment on the US diplomatic cable released by whistle blowing website WikiLeaks and published in The Sydney Morning Herald on December 11th 2010.
But the confidential document reveals that the chief of staff to Treasurer Mr Wayne Swan had told US Embassy officials that BHP had outplayed Rio and that US officials believed this had helped ensure that Chinalco's planned multi billion dollar cash injection into Rio Tinto collapsed in early June 2009.
The June 7th 2009 cable said "Mr Swan's chief of staff has told us on several occasions that BHP has played its cards with consummate skill, in part due to the increasing marginalization of BHP CEO Marius Kloppers as BHP chairman Mr Don Argus has taken the lead in lobbying the government of Australia."
It added that "BHP has been lobbying extensively to block the deal, highlighting concerns about Chinese investment and the possibility that seats on the Rio board would give the Chinese representatives important insights into the producer side of the annual iron ore price negotiations."
The cable said that the deal's collapse spared Canberra from having to make a difficult decision on whether to approve the proposal, but left then Prime Minister Mr Kevin Rudd to face n unhappy China. It added that "We noticed a very glum Chinese ambassador Mr Zhang Junsai waiting outside Mr Rudd's office with the Chinalco CEO Mr Xiong Weiping."
US officials said that BHP's lobbying caused the Rudd government to delay its decision on the bid and that in the intervening time global commodity prices recovered to an extent that Rio no longer needed China's cash injection.
The cable from the US Embassy in Canberra said that "Chinalco has made clear that it considers the Rudd government's reluctance to approve the deal as one of the major reasons for its collapse."
The cable adds weight to earlier reports that BHP executives had targeted Canberra over the deal and an assessment to China's State Council which reportedly said the collapse exposed China's lack of experience and political acumen related to its foreign investments.
Asked about the cable, Mr Swan said his reaction was that it was a commercial matter "between Rio and those that were seeking to invest. And as I understand it, the investment didn't proceed because it fell over on commercial grounds."
He said that had it come before the government he would have taken a decision in Australia's national interests. He added that "Can I just make this point about WikiLeaks generally just because there is reportage of conversations and they are contained in cables, doesn't necessarily mean that those cables are accurate, well grounded, or in context."
Meanwhile, the Australian government has refused to comment on the content of any WikiLeaks documents but has condemned their release and Swan refused to comment on the specifics of the latest publication.
(Sourced from AFP)
