China urged to lessen state funds for mining-paper

BEIJING, March 3 (Reuters) - China should lower its reliance on state capital for overseas mining investments to lessen concerns abroad about government-backed acquisitions, an official newspaper said on Tuesday, citing a top company official.

Concerns over Chinese acquisitions have been triggered by state-owned companies of the world's biggest mineral and metals consumer targetting overseas mining sectors.

"Establish large-sized industry funds to agglomerate relatively abundant state and private capital as a complement to relatively weak mining investment capital of domestic mining firms," the Shanghai Securities News quoted Zhou Zhongshu, chairman of Chinese trading firm Minmetals, as saying.

That could "change the current situation that domestic bank loans are the only financing channel for Chinese companies developing overseas mining resources...to depoliticise overseas acquisitions," Zhou, a delegate of China's top political advisory body, said in a proposal.

"(The country) could establish a national "metals mining development fund", which could be combined with the country's forex reserves," said Zhou, who heads the company which bought Australia's OZ Minerals Ltd (OZL.AX), the world's No. 2 zinc miner, for $1.7 billion last month.

Aluminum Corp of China (Chinalco) has purchased assets in Anglo-Australian miner Rio Tinto Ltd/Plc (RIO.AX) (RIO.L) and Chinese steel mill Hunan Valin Iron and Steel bought into Fortescue Metals Group (FMG.AX) in February.

Analysts have questioned the Australian government's willingness to let Chinese state-owned firms take big stakes in local miners at a time when low commodity prices have left companies vulnerable to overseas predators armed with state funds.

(Reporting by Alfred Cang, Editing by Jacqueline Wong)