Political opposition to a proposed US$19.5 billion investment by Aluminum Corp. of China Ltd. (2600.HK), or Chinalco, in Anglo-Australian mining giant Rio Tinto Ltd. (RTP) stepped up a gear in Australia Saturday after two prominent members of the upper legislative house launched a joint advertising campaign calling for the ruling Labor government to block the deal.

The move will have little influence on whether the proposed tie up gets approval from the Australian government, as that decision lies solely with Treasurer Wayne Swan, but it could signal wider discontent amongst politicians about a wave of proposed Chinese investment in Australian companies.

Non party Senator from South Australia, Nick Xenophon, and the leader of the National Part in the Senate, or upper house, Barnaby Joyce, have jointly filmed a television commercial, calling on the Australian government to block iron ore asset sales to what they describe as "foreign governments."

"This isn't about stopping a take-over by a foreign company, this is about a take-over by a foreign government. As a nation we must protect our key strategic resources," Xenophon said in a statement.

Private business man Ian Melrose is funding the publicity campaign. Their move comes just over a week after the official opposition called on the government to block Chinalco's proposed investment, citing national interest grounds. Liberal Party Leader Malcolm Turbull said on May 1 the Rio and Chinalco deal was "for all practical purposes, between Rio and the government of China itself."

The Rio deal would give Chinalco as much as an 18% stake in the Anglo-Australian miner as well as direct stakes in a number of its mines. In return, a cash infusion from Chinalco would help Rio pay down its debt. Rio has said that it has other options, such as a bond or rights issue and more asset sales to raise funds, if the deal doesn't go through. Swan is due to make a final ruling on Rio next month.

Friday, the Treasurer approved an application by China's Anshan Iron and Steel Group Corp., or Ansteel, to buy a stake of up to 36.28% in Australia's Gindalbie Metals Ltd. (GBG.AU), subject to certain conditions.

-By Enda Curran, Dow Jones Newswires; 61-2-8272-4687; enda.curran@dowjones.com

 
 
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