The Australian government's decision to exclude the Prominent Hill copper property in China Minmetals' bid for OZ Minerals may portend stormy skies ahead for the Chinalco (ACH)/Rio Tinto deal (RTP). At a time when 78% of Australians oppose ownership of Australian resources by Chinese state owned firms, one must wonder if this is further evidence of the coming wave of protectionist policies starting to cascade further from China's blocking of Coca Cola's bid for China Huiyuan Juice Group. Of course, our own Barack Obama's rescinding of NAFTA trucking agreements and the buy-American stimulus package provisions have our key North American and European trading partners up in arms, and may one day be looked back upon as the key catalysts of a new global protectionist movement.

It therefore bears watching how the Australian government handles the Chinalco Rio Tinto review, as I have written before. If assets are deemed off-limits or poison pills are inserted, it would likely send Chinalco packing. This would hit Rio shares hardest and likely provide a nice short term bounce for Chinalco shares. On the other hand, it will likely lend further credence to the psyches of politicians worldwide who are looking for justification for self-serving trade policies.