One of the big political challenges for the PM in 2008 will be a business challenge, which is deciding how much of the natural resource base of Australia he is prepared to hand over to another country. Unfortunately for FIRB and Labor, Chinese corporate interest in the Australian resource sector is made extremely complicated by the fact that the commercial interests of these Chinese firms appear indistinguishable from the interests of the Chinese government.

Last Friday saw Sinosteel bid for Midwest Corporation and also saw Minmetals and Jiangxi Copper team up and bid for the Canadian listed Northern Peru Copper.

So who are Sinosteel, Minmetals and Jiangxi Copper and more to the point who controls them?

Sinosteel is openly pursuing the interests of the Chinese government in securing the supply of commodities as they highlight on their website. Back in October, they also managed to get the approval of the Mugabe government to buy a majority stake in Zimasco Limited which is Zimbabwe’s largest ferrochrome producer.

Similarly Minmetals proudly proclaims on its’ website that its’ business is “To operate state-owned assets and make investments with authorization from the government.”

Jiangxi Copper Company Limited was established in 1997 by Jiangxi Copper Corporation, which is owned by the Chinese government. Jiangxi Copper Corporation owns 48% of Jiangxi Copper Company Limited and according to their website “it is also one of the 512 State-supported key enterprises.”

In other words, these entities are all ultimately controlled by a government not individuals or institutions. Some might say who cares?

Well Kevin Rudd should be taking a good look at what happened in Canada in 2005 when Minmetals made a $5bn bid for the Canadian company Noranda. Such was the level of political opposition from the left and the right, that Minmetals decided to withdraw from the bidding process.

I wonder if Hawker Britton are hiring any mandarin speakers?

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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