China commentary slams Rio Tinto's "perfidy"

BEIJING (Reuters) - A commentary by China's official Xinhua news agency on Wednesday slammed Rio Tinto's "perfidy" for scrapping a deal with Chinalco, saying the agreement fell apart due to "possible political prejudice".

Rio ripped up its $19.5 billion deal with state-owned Chinese metals conglomerate Chinalco last Friday, opting to pay a penalty of $195 million to form a joint venture with its rival BHP Billiton instead.

The venture will link up their huge iron ore assets, which could throw up anti-trust complaints since Rio and BHP, along with Brazil's Vale, already control about 75 percent of the world's seaborne iron ore trade.

China's huge steel sector, the biggest customer, is deep in talks with Rio and BHP about iron ore prices for this year.

"Chinalco was once called a 'white knight' by a grateful Rio when the Chinese national aluminium manufacturer offered a $19.5 billion investment to the debt-ridden mining concern amid the economic slump," Xinhua said in the English-language piece.

"But Chinalco was quickly dumped when the mining market picked up. The perfidy of Rio, the world's third-largest mining company, seems somewhere between short-sightedness and possible political prejudice," it added.

"There is an old Chinese saying: 'A gentlemen's agreement is beyond the letter.' Honesty is the blood of business behaviour."

Xinhua said the break up of the deal smacked of anti-China prejudice from Australia, whose Prime Minister Kevin Rudd is a Mandarin-speaking former diplomat.

"Chinese enterprises recently have been actively investing in Australia -- a normal market behaviour. However, some Australian politicians and media have been wantonly shouting the so-called 'China threat' and putting pressure on the government to refrain from cooperating with China.