China Exonerates Rio Tinto on Merger

Submitted by Share Trading on 15 March, 2010 - 07:46

The collapse of the planned merger of Rio Tinto (RIO) and Chinalco worth up to $19.5 billion on June 5 2009, has been accepted by the Chinese government as a failure that was beyond their control. The report to the State Council exonerates the resources company and the Australian government and accepts that ordinary economic forces halted the largest Chinese foreign investment deal. The report states: "Objectively speaking, the failure of the merger between Chinalco and Rio Tinto lies in the rapid recovery of the world resources market including the related stock market, which was beyond everyone's expectations."

The report also exposes China's lack of experience in the field of investing the country's savings overseas. The report has also concluded that the arrest of Rio Tinto's Stern Hu and three colleagues was an act of revenge against Australia or the company. Some commentators have said that Chinese leaders which were undermined by the failure of the deal left them less willing to help intervene the arrests.