Rio Tinto Kills China Deal (Update)
China, for its part, has been scrambling to take advantage of cheap natural resource prices to snatch up assets all over the globe. The Rio Tinto deal with Chinalco was one of its moves in that direction. The aluminum processor would have nearly doubled its holdings of Rio shares to 18%, assumed two seats on the Rio board, and taken stakes in several important mining assets.
In Australia, that was a controversial issue politically. Some argued that it would represent a compromise in national security since China would have assumed influence over enormous amounts of Australian metals resources.
China has also been involved in heated negotiations with Rio Tinto, BHP and other big miners over the price of iron ore, which China buys in large quantities for steel production. Some have also criticized the Chinalco deal as a way for China to keep ore prices down.
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