Greens see red in Rio Tinto-Chinalco deal

18 February 2009

Australian Greens, the political party dedicated to conservation and responsible environmental management and caring for the planet, has vehemently opposed the Rio Tinto-Chinalco $19-5 billion deal because of China's poor human rights records.

Greens leader Bob Brown said that the proposed Chinalco's purchase and control over major Australian resources raises major political questions.

Last week, China's state-owned Aluminium Corporation of China (Chinalco) said that it will invest $19.5 billion into debt-ridden mining giant Rio Tinto, in a deal that would give China more leverage over the resources and raw materials to fuel its economic boom. (See: Chinalco invests $19.5 billion in Rio Tinto to raise stake to 18 per cent)

Under the deal, Chinalco would invest $12.3 billion to acquire stakes in some of Rio Tinto prized assets in aluminium, bauxite, copper and iron ore projects and buy $7.2 billion in bonds that would convert to Rio shares at a later date.

Rio Tinto has stockpiled $39.1 billion debt accrued mainly from its acquisition of Canadian Aluminum company Alcan for $38.1-billion and now has to reduce its debt by $10 billion by next year with $8.9 billion due in October 2009 and an additional $10 billion the following year.

The deal at the moment has been widely opposed by Rio Tinto's shareholders, investors, rival mining giant BHP Billiton, as well as the Australian Government, which amended its foreign acquisitions act just minutes before the miner announced the deal. (See: Chinalco-Rio Tinto deal may run into rough weather)