Conzinc Riotinto of Australia — Foreign Ownership and Control

Abstract

Conzinc Riotinto of Australia Limited (CRA) was the largest mining group in Australia after BHP. It had a major influence upon the post‐Second World War mining sector and Australian economy. It was responsible for some of the country's largest resource developments, establishing an integrated aluminium industry, playing the principal role in the development of Australia's iron ore export industry, and developing a major copper deposit on the Island of Bougainville. CRA was established in 1962 as the Australian arm of the British mining group, Rio Tinto Zinc Corporation Limited (RTZ), formed through the merger of The Rio Tinto Company Limited with The Consolidated Zinc Limited. Consolidated Zinc was also London‐listed, although with a deep Australian heritage based on its involvement in lead and zinc mining at Broken Hill. CRA's status as a foreign‐owned and controlled company had a major influence upon its corporate priorities for the two decades following its formation. The company's foreign majority ownership restricted its business opportunities, particularly during the 1970s. However, as early as the mid‐1960s, anti‐CRA sentiment was evident from politicians, public servants, Australian mining competitors and, to some extent, the public. CRA's standing as “un‐Australian” was viewed by company management as an impediment to attracting and retaining quality employees. These factors led CRA to engage with successive Commonwealth Governments to attempt to secure arrangements more accommodating to its business interests. This involved considerations as diverse as the takeover of the London parent company — to facilitate greater Australian shareholding in the Australian entity — through to the restructuring of CRA's interests in a new majority‐owned Australian company. Ultimately, CRA was instrumental in changing foreign investment legislation, providing a pathway for it as a foreign‐owned company to move to an Australianised or majority Australian‐owned status. With this, CRA had an ability to participate in resource investments on terms similar to those for Australian companies. CRA gained naturalising status in 1979 and, in 1986, that of a naturalised or Australianised company. Differences in perspectives relating to strategic direction and financial management between the parent company in London and CRA in Melbourne, brought to the fore issues of control. The situation became so serious that it resulted in the departure of the chairman and chief executive on the eve of CRA achieving Australian majority‐owned status. The events had a later influence on the formation of a dual‐listed company structure in 1996. Through this structure, RTZ regained majority share ownership of the assets previously held in the Australian company. CRA lost its naturalised status and its identity as Australia's then second largest Australian mining company.