Comment & Analysis

Australian Federal Treasurer Wayne Swan on Friday sought to quash speculation that Canberra was trying to block or slow down Chinese investment in mining.

Mr Swan told members of the Australia-China Business Council that the government was closely examining Chinese bids for Australian miners. He warned that investment must be in the "national interest" especially where the investor was also a consumer and able to control pricing and production.

He said there was no truth in suggestions that the government had quietly implemented a policy of blocking or delaying Chinese applications for investment approval. His speech to the ACBC followed suggestions that Canberra was planning to impose a 50 per cent cap on ownership of resources groups by Chinese state-run entities.

Mr Swan said: "You will have heard, as I have, a couple of arguments about our approach to Chinese investment - broadly, that we have changed our policy to a more restrictive stance, and furthermore, are slowing down the processing of Chinese applications. I don't think either of these [claims] stands up when considered against the facts."

Mr Swan said he had approved a Chinese investment proposal on average once every nine days since coming into office. Speculation about the imposition of a cap grew after an attempt by China's state-owned Sinosteel to buy into the West Australian iron-ore miner Murchison Metals was delayed. At the time Mr Swan defended the 90 days it took to assess Sinosteel's application to raise its holding in Murchison Metals from 2.4 per cent to more than 15 per cent. Mr Swan told the meeting that approval generally took 30 days, although large or more complex cases could take longer.

"It is certainly true that some Chinese proposals have needed a more detailed examination though, obviously, I won't go into the specifics of each case," he said.

The treasurer said previous governments faced the same issues of resource consumers investing in resource producers and their response was to introduce formal foreign investment rules. "This government prefers to maintain a case-by-case consideration of proposals," he said."

●Baosteel, China's largest steelmaker, will pay as much as 97 per cent more for iron ore from BHP Billiton (LSE: BLT.L - news) after the two sides on Friday announced the end of protracted annual price negotiations. Baosteel said prices would increase 80-97 per cent, in line with the prices that Chinese steelmakers agreed with Rio Tinto (LSE: RIO.L - news) in June.

BHP had held out for a higher price, arguing that the amount paid by Chinese steelmakers should reflect more of the freight rate differential between shipping Australian and Brazilian ore to China. BHP wanted to reap more benefit from the fact that it is cheaper for Chinese mills to transport ore from Australia.

Additional reporting by Patti Waldmeir in Shanghai