China signs partnership deals with aluminium and mining firms

Two of China's biggest state-owned companies have signed partnership agreements with Rusal, the world's largest aluminium producer, and Anglo American, the mining giant, to develop mining projects in China and Africa.

Coming three days after Chinalco, the state-owned aluminium giant, shocked the market by buying a £7bn stake in Rio Tinto to potentially kill BHP Billiton's ambition to forge the world's first mining super-major, the moves underline a dramatic shift by China as it takes a more aggressive role in securing the vital natural resources and infrastructure it needs to fuel its economic growth.

China is the world's biggest consumer of aluminium, iron ore and copper, and few analysts thought it would sit by as the sector majors teamed up in the latest consolidation wave. Chinalco's raid on Rio's shares was interpreted by some analysts as an effort to stymie a deal that would see the elimination of one of its suppliers and concentrate pricing power for key commodities, such as iron ore, in the hands of a couple of industry behemoths.

The Chinalco president, Xiao Yaqing, said yesterday that he had no intention of raising the company's stake in Rio Tinto, though his buying spree has increased the pressure on BHP to improve its offer. The company has until tomorrow to make a formal offer for Rio or walk away for six months.

The BHP-Rio saga is just one aspect of what appears a multi-pronged offensive launched by the Chinese to exert some control over the industry. Rusal yesterday signed a memorandum of understanding with China Power Investment Corporation under which the companies agreed deals worth an estimated $3bn (£1.5bn) to create what they billed as a "vertically integrated aluminium complex". The agreement envisions the construction of an alumina refinery in Guinea and a smelter in the Qinghai province of China. Separately, Anglo American unveiled an agreement with China Development Bank (CDB), an active financer of capital projects, including Chinalco's share raid last week.

There have also been reports of CDB holding talks about taking a 35 per cent stake in Xstrata.