Australia's competition watchdog, the Australian Competition and Consumer Commission (ACCC) said it will not oppose the move by the Aluminium Corporation of China (Chinalco) to buy a stake in Anglo-Australian mining giant Rio Tinto.

 

Rio Tinto shares rose 1.05 percent on the news while those of its rival BHP Billiton dropped 1.59 percent.

 

ACCC said it had investigated the deal because Chinalco and a number of Chinese steel producers are owned by the same parent company, and wanted to be sure it would not be able to lower the price of Australian iron ore to the benefit of Chinese steel makers. ACCC concluded the Chinalco deal would not result in the fall of the global iron ore price, and would not decrease competition in the bauxite, copper, and alumina markets in Australia.

 

Chinalco welcomed the statement, saying it expects to advance in step with Rio Tinto which possesses advanced technology and high quality assets. The US$19.5 billion investment will significantly improve the financial position of Rio Tinto, and, with its position in the Chinese market Chinalco is confident of helping Rio Tinto achieve the leading position in the iron ore industry.

 

The Australian Foreign Investment Review Board (FIRB) said it was extending its examination of the Chinalco/Rio Tinto deal from 30 days to 120 days. Analysts say even though ACCC's approval has improved the deal's prospects, final approval depends on the Foreign Investment Review Board (FIRB).