BHP Billiton chairman Don Argus warned that growing Chinese investment in Australia's mining sector will be critical for the country.
"Australia needs to be most careful that it does not forfeit the economic merit of our resources sector," said Argus, on the sidelines of the Australia-China Business Council meet yesterday.
Argus urged the Federal government to be cautious when ruling on Rio Tinto's deal with Chinalco.
He said Australia was dealing with government-backed groups keen to access the nation's resources companies in the present environment.
"We have Brazil Inc, Russia Inc and now we are seeing China Inc," he said.
However, he was reluctant in speaking against the particular deal.
"The government has to make that call," he told reporters when asked about his opinion on the Rio-Chinalco deal.
China's state-owned aluminium giant is waiting for the Australian nod to put $19.5 billion into Rio Tinto, Beijing's biggest investment ever in a foreign company. (See: Chinalco invests $19.5 billion in Rio Tinto to raise stake to 18 per cent)
There were reports that in the face of stiff opposition from different quarters, Rio Tinto might replace a $7.2-billion convertible bond sale to Chinalco with a capital raising to existing shareholders. (See: Rio may issue $7.2 billion bonds to existing shareholders).
Analysts say that BHP Billiton is waiting for the correct time to enter the game. It's said to be interested in a joint venture of its Pilbara iron ore operations with those of Rio, with both groups separately marketing their production.
Last year BHP Billiton has launched a $147.4 billion bid for Rio Tinto, which was rejected by the company. (See: Rio Tinto rejects BHP's revised offer of $147 billion).
"Markets go up and down ... but the demand for good resources will continue," parliamentary secretary for Mines Michael Choi said at the meet.
"The boom time will come back and I certainly do not want (any investors) to come back to the Queensland government at that time and say, 'We are desperately in need of resources'," she added.
The Australian federal government is worried that blocking Chinalco could provoke a backlash from its biggest trading partner.
Meanwhile, a study by the Australia China Business Council, prepared by an independent economic consultancy, says a bilateral trade agreement with China would boost Australia's gross domestic product by A$146bn ($114bn) over 20 years.
Canberra and Beijing have held 13 rounds of talks on a trade agreement over the past four years. Chinese barriers to agricultural goods, fishing and animal products are among the biggest obstacles to a comprehensive agreement.
Frank Tudor, chairman of the business council, whose 800 corporate members include Rio, BHP Billiton, Qantas Airways, Chinalco subsidiary Chalco, and Bank of China, said bilateral barriers to trade and services should be removed.