We're not on road to Rio, say Chinese

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The group sparked expectations it would buy Rio outright on Friday when it teamed up with America's Alcoa to snap up a 12% stake in Rio in London for £7.1billion. Rio is fighting a hostile bid from BHP that would create a combined company with vast power over the price of the world's metals.

Word was that the Chinese government, ever concerned about securing future supplies of metals for its economic boom, was set to give Chinalco a £61billion war chest to fund an audacious rival takeover.

But today, the Chinese firm's president Xiao Yaqing said on a visit to Sydney that Beijing was not seeking control of Australian resources. He added that, for now, Chinalco's investment in Rio was purely financial. There is speculation the Chinese government acted to stop a merger of BHP Billiton and Rio. That would create a mining giant with a virtual monopoly over iron-ore and coal supplies that are critical to China's industrialisation.

Xiao denied Beijing was behind the raid, saying: "This concern is completely unfounded. All the decisions that have been made are entirely Chinalco's own decisions. It doesn't have anything to do with the government."

Insiders have said that Beijing had been plotting a counterstrike for months, but Xiao said this was not so. He said a report claiming that Beijing had put a $120billion (£61.08billion) war chest at his disposal through the China Investment Corporation was "laughable".

He added: "As far as our investment in Rio is concerned, it is a strategic financial investment. We don't have further plans."

Xiao said he was happy with the 12% stake he took in Rio last week, and had no plans to buy any more. He added that he would not meet BHP executives while in Australia. Chinalco is making an application for voluntary approval from Australia's Foreign Investment Review Board, despite not being required to do so on the basis of its current stake, according to an insider who said the Chinalco stake in Rio was designed to give it a seat at the table.

Under a Takeover Panel ruling, BHP must decide by Wednesday whether to formalise its bid for Rio, or walk away.