Aust denies singling out China investment

October 26, 2009 06:26:50 PM

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Australia on Monday denied singling out Chinese investors after imposing tough conditions on a breakthrough mining takeover following a series of failed deals.

Foreign Minister Stephen Smith, speaking after Yanzhou Coal's 3.5 billion dollar (3.2 billion US) takeover of miner Felix Resources was cleared, said all foreign investors were treated alike.

"State-owned enterprises and sovereign wealth funds from all countries are treated in exactly the same way, as the Treasurer has made clear through the publication of the relevant Foreign Investment Review Board (FIRB) guidelines," he said, in an address to the Australia National University's China Institute.

The FIRB twice ordered Yanzhou to resubmit its bid before clearing it on Friday subject to operating the assets through a locally based company with a mainly Australian management and sales team.

Yanzhou will also have to refloat 30 percent of the company on the Sydney stock exchange by the end of 2012, while the new firm, Yancoal, will have to hive off 50 percent of its Australian mining assets.

Smith said Australia welcomed Chinese investment, which has totalled 38 billion dollars since the current government took power in late 2007.

"Despite a contrary view sometimes being expressed in Australia, the facts tell a very positive story about Australia's welcoming policy and posture towards investment from China," he said.

"Since November 2007, the Australian government has approved over 100 investment proposals from China to acquire Australian businesses. Ninety-six were approved unconditionally."

Last month the FIRB told Chinese investors it preferred a 50 percent cap on foreign ownership of new ventures and 15 percent in major producers, and urged them to pursue acquisitions in a less opaque and heavy-handed way.

China Non-Ferrous Metal Mining later dropped its bid for miner Lynas, while Wuhan Iron and Steel's attempt to gain access to a mining project on a missile range was rejected on national security grounds.

In June, mining giant Rio Tinto walked away from a 19.5 billion US dollar cash injection from Chinalco, angering China's state media. Weeks later China detained a top executive and eventually charged him with industrial espionage.

Smith said he hoped relations were "back to business as usual" after tensions over the Rio arrest and Australia's move to allow a visit by exiled Uighur leader Rebiya Kadeer in August.

Chinese Vice President Li Keqiang is due to visit Australia in the coming days, while Prime Minister Kevin Rudd met China's Premier Wen Jiabao on the sidelines of the East Asia Summit in Thailand at the weekend.

"We have been going through some tense times but we're very confident that we're now effectively back to business as usual and that's a good thing," Smith told reporters.

Australia has emerged recession-free from the global financial crisis, helped by buoyant trade with China, which totalled 74 billion dollars (68.5 billion US) last year.

But Chinese takeover moves have caused unease here with critics arguing Australian workers will lose out.