China Investment denies Rio Tinto bid

Updated: 2007-11-27 06:54

BEIJING -- China Investment Corporate Ltd (CIC), the country's newly launched state foreign exchange investment company, said in a statement Monday that it had never been involved in a bid for Rio Tinto.

The statement was intended to dispel market rumors started by a report in Chinese weekly newspaper China Business saying the CIC was leading a group of Chinese steel makers in a bid for Rio Tinto.

On Monday, Rio Tinto also denied reports of a bid from China Investment.

Australia's BHP Billiton, the world's largest mining company, is proposing to buy its rival Rio Tinto, the world's number three miner, for more than $120 billion.

BHP Billiton's share price surged 1.84 dollars to 42.11 dollars, while its takeover target Rio Tinto skyrocketed 9.6 dollars to 138 dollars on the Australian stock market on Monday, amid speculation of a rival bid from China.

The proposed merger between the world's two leading mining groups has aroused concerns over their combined market power over iron ore.

The CIC was launched in September to mitigate the risks in China's huge foreign exchange reserve.

It has $200 billion in registered capital allocated from the reserve.

China's Vice Minister of Finance Li Yong disclosed investment plans for the CIC in early November at a forum, dispelling rumors that China would try to buy out European and American companies in large numbers.

Li said one third of CIC's capital would be used to purchase Central Huijin, which now controls China's major state-owned commercial banks; another third to replenish the capital of the Agricultural Bank of China and China Development Bank; and the remaining third to invest in global financial markets.

In May, the new company, still in preparation, made its first investment in non-voting shares, valued at 3 billion US dollars, in the US private equity firm, the Blackstone Group.

The company is expected to make its second investment of about $100 million in the initial public offering of the China Railway Group in Hong Kong.

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