The autumn trees are putting on a beautiful show in Canberra but the real action is taking place behind the scenes.
John Garnaut has written in the Fairfax newspapers that Chinalco will restructure is $US19.5 billion investment deal with Rio Tinto to allay Australian Government concerns about the perceived influence it may hold over Rio.
John has quoted sources close to Chinalco as saying the company is open to discussing a proposal for Rio to issue new convertible bonds to existing shareholders. London shareholders were up in arms that they were not offered a bigger slice of the company before it was offered to Chinalco.
His report says that Chinalco was also likely to strongly support any conditions to “re-Australianise” Rio, which has its headquarters in London.
This does not negate the fact that a company 100 per cent owned by the People’s Republic of China would own some of Australia’s valuable sovereign wealth assets.
On Bloomberg TV I was asked whether there was an acceptable level of ownership. Whatever the level, it doesn’t take away from the fact that a foreign government (through a state-owned entity) would own Australia’s mineral resources.
If the Chinese Government wanted to buy Qantas we could go and buy more planes but as I said, the Divine Being is not going to suddenly deposit more coal and iron ore in Australia if we sell our mineral resources in situ.
If you follow Mr Rudd’s transcripts you may notice that the “national interest” has replaced “working families” as his latest cause. Well, Mr Rudd it is up to you and Mr Swan to do exactly what is in the national interest and not let our mineral wealth be controlled by another government.
Imagine the diplomatic row if there was a problem with pricing, employment, export earnings, taxation or myriad other matters.
The deal must not go ahead.