The unilateral scrap of its marriage with Aluminum Corp. of China, or Chinalco, last Friday by Australia's Rio Tinto was a "stunning" news to most of the Chinese who have been eyeing on the progress each day on the hopeful transaction, Chinalco president Xiong Weiping told Xinhua Friday in an exclusive interview in Canberra.
He said that no one had been as sincere as Chinalco in promoting the transaction after the news of inking an agreement with Rio Tinto came out in February. But Rio Tinto has eventually been proved that it has been cheating in the marriage.
When the dust settled, the president said, a retrospection was required from the very beginning to the end of Chinalco's bitter engagement.
First, he said, "Rio Tinto failed our expectation as the Chinese saying goes that 'A friend in need is a friend in deed.'"
When Rio Tinto first came to Chinalco desperately seeking help for easing its debt-driven disaster, Chinalco has made no hesitation to offer it a US$19.5-billion plan, a biggest ever one in terms of amount, with much more favorite and generosity than any other investment outside Australia.
"Chinalco has worked hard to respond constructively and engage with Rio Tinto to make appropriate amendments to the transaction terms announced in February to better reflect the changed market background and feedback from shareholders and regulators," Xiong said.
However, Chinalco, a sincere player, turned out to be a loser in the game when Rio Tinto joined hands with its long-time rival BHP Billiton who had been trying to catch the fish fruitlessly for over 10 years.
"As a result, we are very disappointed with this outcome," the president said. "We have already funded 21 billion U.S. dollars for the transaction."
Second, Rio Tinto's ability to say "bye bye" to Chinalco and "hello" to BHP overnight cast doubt on whether government indications were behind the curtain.
The Australian reported Saturday "It is believed Rio would have embarked on the rights issue even without the BHP deal, with the Chinalco rescue package facing growing opposition from shareholders, and the Rudd government also privately voicing concerns."
"We have received extensive feedback from shareholders, and some from regulators, expressing concerns about the (Chinalco) transaction as structured," Rio chairman Jan du Plessis said Friday.
The duration of case review was lengthened from 30 days to 90 days by the Foreign Investment Review Board which "accidentally" allows precious time for Rio to find other channels to ease its debt in this "time is money" era. "There can be no question that the Foreign Investment Review Board wanted changes to Rio's arrangements with Chinalco," said the Australian.
"Canberra hated this deal from the start," says a Melbourne executive involved in the deal as quoted on Monday by the Sydney Morning Herald which also reported "BHP clearly has some cleaning up to do in China. But the company can't be blamed for the perception that the Rudd Government swallowed its message."
Local news analysis also made surface Treasurer Wayne Swan's indication that Rio Tinto would reconsider the joint venture deal with BHP Billiton that was left over 10 years in the making.
Third, the Rudd government has been playing the "national interest" card from day one and displayed the skill well. Due to "national interest", a 19.5 U.S. billion-dollar offer was dead which generated a palpable signal of negativity from inside.
Rudd's statement on Friday that Rio's dumping of Chinalco was "entirely a commercial matter" or Swan's assurance that "Chinese investment is welcome in this country" sounds less sincere, given the facts.
"Still far too few in Australia comprehend the scale and importance of what is going on in China, be it in the economy or politically, let alone the importance of China in terms of its palpable impact on our region and on the structure of world economic and political power," Peter Drysdale, professor of College of Asia and the Pacific, Australian National University, told Xinhua Sunday.
"Fortunately we have a Prime Minister who knows more than most,but that is not enough. His understanding needs confirmation and articulation in a national statement that serves to put the madder ideas out there," he said.
Unless there is a massive effort to get things sorted out quickly, this would damage Australia's standing as an investment destination, especially in China but also among other global investors, and with its position in the business in the world, Drysdale said.
China seems less prepared in this harsh game and has underestimated the pressure of Australian press, while overestimated its relation with Australia.
"We need to revaluate the so-called 'China's friend' Australia," led by a mandarin-speaking Prime Minister who indeed has left the Chinese an impressive image of his ability to deliver a speech in Chinese in Beijing University, said an analysis article published in China, "We can not help thinking: is the friendship one-way?"
The mind set behind Chinalco's offer is that Australia, in the eyes of most Chinese, is a friendly and reliable country, "pretty well from the top to the bottom of Chinese society", Drysdale, who is currently visiting China's Chongqing, told Xinhua via email, "This is a huge and precious asset to Australia but in these affairs, it is an asset that can be easily wasted."
"Australia's management of its relationship with China is not merely of national significance; it is of regional and global importance because of Australia's strategic role as an energy and resource supplier to China and, indeed, the whole Northeast Asian region," Drysdale warned.
(Xinhua News Agency June 10, 2009)
