Lovers of three-dimensional chess have been afroth these past few days over the possibility (first raised by an Australian newspaper) that BHP Billiton might be a takeover target for the very same rival it’s looking to outfox in its courtship of Rio Tinto. All very convoluted, but perhaps, as The Financial Times helpfully points out, a lot more bark than bite. Click here for the internal memo from Jane McAloon, BHP’s group company secretary, putting things back into black and white.

We find the prose style of Jane McAloon, group company secretary at BHP Billiton to be refreshingly direct. Here’s her response to a letter from the Australian stock exchange regulator, enquiring whether BHP might have any knowledge over the extraordinary claim that one of Chinna’s steelmakers might buy 10 per cent of the miner:

Dear Mr Gerraty Price Query I refer to your letter of 9 April 2008. In response to your specific questions, we reply as follows: 1. No. BHP Billiton is not aware of a proposed acquisition by Chinese authorities of a substantial stake in BHP Billiton. 2. Not applicable in view of our answer to question 1. 3. No, aside from the announcements issued during the relevant period, including BHP Billiton’s announcement of 9 April 2008 concerning metallurgical coal price negotiations. 4. The Company is in compliance with the Listing Rules and, in particular, Listing Rule 3.1. Yours sincerely Jane McAloon Group Company Secretary

No news there, of course. If did BHP did know that China was about to spend umpteen billion on its stock, the betting is that we would all know by now - given the fevered speculation surrounding the matter down under.

This was all kicked off by The Australian on Wednesday, when the paper’s China correspondent Rowan Callick wrote:

TENSIONS between Australia and China are set to rise as Kevin Rudd arrives in Beijing today amid revelations that China is preparing to buy a multi-billion-dollar stake in BHP Billiton.

Sources in Beijing said China was in the early stages of planning to snare a bigger chunk of BHP than the 9 per cent stake in rival Rio Tinto it bought with US-based Alcoa for $15 billion in a stock market raid in February.

By Thursday, The Australian’s journalese had shifted somewhat:

KEVIN Rudd has warned the Chinese Government he will “defend the Australian national interest” amid speculation that China is planning a stockmarket raid on resources giant BHP Billiton.

And it is a sure bet that The Australian’s local rivals will be looking for further chinks in the story - shares in BHP fell 2 per cent on Thursday, as various unnamed Chinese sources queued up to tell various news agencies that they didn’t know anything about the BHP stake revelation move scenario speculation.

But what does logic dictate here?

Simple - China is bound to have looked at the feasibility of buying a holding in BHP; it would have been incompetent not to have done so as it proceeded to spend $15bn on a chunk of Rio Tinto, with the pretty clear intention of ultimately blocking any merger between Rio and BHP.

But at the same time, common sense dictates that it is not going to happen at anytime in the foreseeable. Australia, as a country, sees BHP as an “Australian company.” Any hint of Chinese control would end in a stoush.

Continue reading on FT.com

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