Mining giant BHP Billiton lobbied the Australian government hard to bring down a proposed 19.5 billion US dollar deal between its rival Rio Tinto and China's Chinalco, a leaked US cable shows. Spokesmen for BHP and Rio Tinto refused to comment on the US diplomatic cable released by whistleblowing website WikiLeaks and published in The Sydney Morning Herald on Saturday.
But the confidential document reveals that the chief of staff to Treasurer Wayne Swan had told US Embassy officials that BHP had outplayed Rio and that US officials believed this had helped ensure that Chinalco's planned multi-billion dollar cash injection into Rio Tinto collapsed in early June 2009.
The June 7, 2009 cable said Swan's chief of staff "has told us on several occasions that BHP has played its cards with consummate skill, in part due to the increasing marginalisation of BHP CEO Marius Kloppers as BHP chairman Don Argus has taken the lead in lobbying the GOA [government of Australia]."
"BHP has been lobbying extensively to block the deal, highlighting concerns about Chinese investment and the possibility that seats on the Rio board would give the Chinese representatives important insights into the producer side of the annual iron ore price negotiations," it said.
The deal's collapse "spared" Canberra from having to make a difficult decision on whether to approve the proposal, but left then prime minister Kevin Rudd to face "an unhappy China", the cable said. "We noticed a very glum Chinese ambassador Zhang Junsai waiting outside Rudd's office with the Chinalco CEO Xiong Weiping," it said.
US officials said BHP's lobbying caused the Rudd government to delay its decision on the bid and that in the intervening time global commodity prices recovered to an extent that Rio no longer needed China's cash injection. "Chinalco has made clear that it considers the Rudd government's reluctance to approve the deal [as] one of the major reasons for its collapse," the cable from the US Embassy in Canberra said. The cable adds weight to earlier reports that BHP executives had targeted Canberra over the deal and an assessment to China's State Council which reportedly said the collapse exposed China's lack of experience and political acumen related to its foreign investments.