China knocked back deal to undermine Rio

CHINA has underscored its power in the developing world by revealing it was offered a huge African iron ore field seized from Rio Tinto, but declined out of "sensitivity" to international repercussions.

The offer, by late Guinea dictator Lansana Conte to Chinese companies including Chinalco, has implications for the Australia-China relationship, and Chinalco's $US19.5 billion ($A27 billion) investment bid in Rio Tinto.

Rio had sunk $600 million into Guinea's Simandou iron ore concession and had planned to invest another $10 billion to make it the largest iron ore mine outside of Australia and Brazil.

Wang Wenfu, who leads Chinalco's overseas acquisition team, which includes its pursuit of 18 per cent of Rio Tinto, told The Age that the Guinean Government last year offered to hand Rio Tinto's iron ore tenement to Chinese state-owned companies in exchange for railways, roads, ports and hydroelectricity projects.

The Chinese Government has already built a 50,000-seat sports stadium, a national assembly building and other landmarks in the Guinean capital, Conakry, and provided services including training for the army's special forces.

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