SWF Radar RioTinto

The Observer reports that, “Rio Tinto is looking to establish joint ventures with Chinese government-backed companies, such as Chinalco, according to Tom Albanese, chief executive of the mining giant. Chinalco bought a 9 per cent stake in Rio to try to block an $80bn hostile takeover by rival BHP. The Chinese have become concerned that a combined BHP-Rio operation would control a third of the world’s seaborne iron ore supplies. An alliance between Rio and Chinalco would act as a counterweight.

AFP reports that, “Chinese aluminium giant Chinalco insisted Friday its multi-billion dollar investment in Anglo-Australian miner Rio Tinto was safe, amid reports the collapse of Lehman Brothers had put it at risk.”

Carl Mortishead of The Times writes of the decision of Norway’s Government Pension Fund-Global to divest in Rio on environmental grounds that, “This is Norwegian government policy at work and it has the backing of a fund that is worth some $375-billion (U.S.). It is the most striking example of a sovereign wealth fund used to implement social and political policy at the corporate level with a detailed ethical investment policy.”

I wonder how the IMF’s GAPP code for SWFs will deal with SRI.

Thomson Reuters reports that, “Norway on Tuesday excluded iron ore miner Rio Tinto from its $375 billion (212.5 billion pounds) sovereign wealth fund [the Government Pension Fund-Global] due to environmental concerns over its activities, as part of its drive for ethical investment.”

The Australian writes that, “Chinese investment in Australian resources is like a political chess game, full of subtle moves and counter-moves for a long-term strategic play.”

The Australian reports that, “[Australian treasurer] Wayne Swan has given approval for the Chinese government-owned mining giant Chinalco to acquire up to 11 per cent of the Rio Tinto group in the first high-profile test of the Rudd Government’s stance on more than $30 billion of Chinese foreign investment bids.”

The Sydney Morning Herald writes that, “Rio Tinto’s chief executive, Tom Albanese, has weighed into the debate over investment by foreign governments in Australia, saying the mining sector’s growth depends on foreign investors’ money.”

The WSJ Deal Journal writes that, “The surge today in shares of Rio Tinto means the $14.1 billion stake that state-owned Aluminum Corp. of China bought in the United Kingdom mining giant is finally in the black. In a surprise move referred to as ‘the dawn raid,’ Chinalco, as it is known, bought Rio’s London-listed shares in early February for 60 pounds each. The investment, made with help from Alcoa of the U.S., was at a hefty premium to Rio’s then share price of just 50 pounds and seemed to make sense only in the context of China’s interest in influencing the outcome of BHP Billiton’s takeover battle for Rio. (The Chinese steel industry is a big customer of both companies.)”

ChinaStakes.com writes that, “A rumor has erupted in the Australian media that China is planning to buy up a 9% or greater stake in miner BHP Billiton, Ltd., Australia's and the world’s largest diversified resources company. The possible bid is being interpreted as an attempt to interfere in BHP's proposed acquisition of rival Australian mega-miner Rio Tinto, the world's second largest iron ore producer.”

The Australian reports that, “Sources in Beijing said China was in the early stages of planning to snare a bigger chunk of BHP than the 9 per cent stake in rival Rio Tinto it bought with US-based Alcoa for $15 billion in a stock market raid in February. … The plan to buy a stake in BHP is under development, with Chinese authorities yet to determine which state-owned financial institution or steel mill - such as the largest, Baosteel - might take the lead role in seeking sellers within BHP’s diverse shareholder base.”