MercoPress. South Atlantic News Agency

Chinese investor eyeing 9% stake in BHP Billiton

Shares in mining giant BHP Billiton have jumped on fresh speculation a Chinese investor is eyeing up a 9% stake in the company. The Australian press reported that “Chinese interests” have approached an Australian investment fund to help buy into the world's biggest miner.

The move would help China secure supplies of key raw materials, such as iron ore and oil, needed to fuel its booming economy. BHP Billiton which describes itself as the world's largest diversified resources company is currently mounting a hostile bid for rival Rio Tinto. The press report said the Chinese aimed to buy a 9% stake in BHP by teaming up with an Australian pension fund and a private equity investor. Buying a stake in BHP may also help Beijing scupper the miner's bid to take control of Rio Tinto. BHP launched a hostile bid worth around 147 billion US dollars for its rival in November last year, offering 3.4 of its own shares for each Rio Tinto share. Such a tie-up would create a mining superpower with control of a third of the world's iron ore, a key ingredient for making steel. China, which buys 40% of its iron ore from these two mining companies, is worried the new group would have too much control over the supply and prices of the raw materials fuelling its red-hot economy. Regulators in South Africa, Canada, the US, the European Union and steelmakers in Japan have all expressed reservations about the proposed takeover. Chinese interest in Australia's mining sector has been heating up this year. In February, China's state-owned aluminum group Chinalco teamed up with US rival Alcoa to buy a 9% stake in Rio Tinto while Sinosteel's 1.3 billion US dollars bid for Midwest Corp was given the green light by Australian authorities last month. BHP's shares are dual listed in London and Sydney. Its Australia-listed shares rose as much as 4% on Friday to a record high of 50 Australian dollars before closing 1.5% higher at 48.70 Australian dollars. But BHP's London-listed shares fell, with analysts saying rumors of a Chinese share raid had been priced in during the previous trading session when shares rose 3% BHP Billiton is also involved in petroleum activities and last October announced it had acquired an interest in fourteen exploration and production licenses offshore the Falkland Islands in the South Atlantic. The company signed contracts with Falkland Oil and Gas Limited (FOGL) for rights to explore and, if successful, eventually produce oil and gas from the East Falkland Basin located off the southern and eastern coast of the Falkland Islands.