Swan rejects Chinese resources bid on 'national security' grounds

By Stuart Fagg, ninemsn Money

Treasurer Wayne Swan has blocked a Chinese company's $1.7 billion bid for OZ Minerals on national security grounds.

Swan said Minmetals' tilt to buy 100 percent of OZ Minerals would not be approved because one of the mines involved is situated near a sensitive weapons testing area in South Australia.

"OZ Minerals' Prominent Hill mining operations are situated in the Woomera Prohibited Area in South Australia," Swan said. "The Woomera Prohibited Area weapons testing range makes a unique and sensitive contribution to Australia's national defence."

The government is willing to consider alternative proposals relating to OZ Minerals' other assets and businesses, he said, adding that it is not unusual for governments to restrict access to sensitive areas on national security grounds.

Earlier this week, China moved a step closer to owning its biggest-ever stake in an Australian company after the Rio Tinto tie-up with Chinalco passed through the competition watchdog.

The $28 billion deal between China’s state-owned mining giant Chinalco and the Anglo-Australian Rio Tinto, is "unlikely" to affect competition in the mining industry, the Australian Competition and Consumer Commission (ACCC) has ruled.

The bid, which could see Chinalco double its stake in Rio to 18 percent, is the largest overseas investment by a Chinese company ever proposed.

Minmetals said after Swan's announcment that it is still keen to buy some parts of Oz Minerals.