China Investment Corporate Ltd. (CIC), the country's newly
launched State foreign exchange investment company, said in a
statement Monday that it had never been involved in a bid for Rio
Tinto.
The statement was intended to dispel market rumors started by a
report in Chinese weekly newspaper China Business saying the
CIC was leading a group of Chinese steel makers in a bid for Rio
Tinto.
On Monday, Rio Tinto also denied reports of a bid from CIC.
Australia's BHP Billiton, the world's largest mining company, is
proposing to buy its rival Rio Tinto, the world's number three
miner, for more than US$120 billion.
BHP Billiton's share price surged US$1.84 dollars to US$42.11,
while its takeover target Rio Tinto skyrocketed US$9.6 to US$138 on
the Australian stock market on Monday, amid speculation of a rival
bid from China.
The proposed merger between the world's two leading mining
groups has aroused concerns over their combined market power over
iron ore.
The CIC was launched in September to mitigate the risks in
China's huge foreign exchange reserve.
It has US$200 billion in registered capital allocated from the
reserve.
China's Vice Minister of Finance Li Yong disclosed investment
plans for the CIC in early November at a forum, dispelling rumors
that China would try to buy out European and American companies in
large numbers.
Li said one third of CIC's capital would be used to purchase
Central Huijin, which now controls China's major state-owned
commercial banks; another third to replenish the capital of the
Agricultural Bank of China and China Development Bank; and the
remaining one third to invest in global financial markets.
In May, the new company, still in preparation, made its first
investment in non-voting shares, valued at US$3 billion, in the US
private equity firm, the Blackstone Group.
The company is expected to make its second investment of about
US$100 million in the initial public offering of the China Railway
Group in Hong Kong.
(Xinhua News Agency November 27, 2007)
