24 August 2008

Chinalco's Acquisition of Shares in Rio Tinto

Today I approved the proposal by the Aluminium Corporation of China Limited (Chinalco) to acquire up to 14.99 per cent of the shares in Rio Tinto Plc, the London Stock Exchange listed arm of Rio Tinto Group.

A 14.99 per cent stake equates to an interest of around 11 per cent in the Group, which includes the Australian listed Rio Tinto Limited.

I have decided to raise no objections under Australia's foreign investment policy to Chinalco acquiring a shareholding interest of up to 14.99 per cent of Rio Tinto Plc on the basis of Chinalco making two undertakings.

First, Chinalco has undertaken to me that it would not raise its shareholding above this level without notifying and receiving fresh approval from the Government under Australia's foreign investment review arrangements.

Second, Chinalco has also undertaken that it will not seek to appoint a director to Rio Tinto Plc or Rio Tinto Limited for as long as it holds a shareholding of below 15 per cent.

Any future proposal to increase its level of ownership above 14.99 per cent would require re‑assessment at that time against Australia's national interests under the Foreign Acquisition and Takeovers Act 1975.

While Australia welcomes foreign investment in our economy, we will carefully examine national interest issues where these arise in relation to foreign sovereign ownership.

I have determined that the undertakings agreed with Chinalco are acceptable for protecting the national interest in this matter.