Swan said he had approved the acquisition by the aluminium giant of up to 14.99 percent of the London-listed arm of Rio Tinto -- an amount which would equate to about 11 percent in the group.

Swan said he had no objections to the purchase under Australia's foreign investment laws provided Chinalco not raise its stake above 14.99 percent without prior government approval.

"While Australia welcomes foreign investment in our economy, we will carefully examine national interest issues where these arise in relation to foreign sovereign ownership," Swan said.

"I have determined that the undertakings agreed with Chinalco are acceptable for protecting the national interest in this matter."

Chinalco has undertaken to not seek to appoint a director to either the London arm of Rio Tinto or the group as long as its holding remains below 15 percent.

The Chinese company has said its acquisition, for which it paid about 14 billion US dollars in February, was a strategic investment.

The raid by Aluminium Corp of China, or Chinalco, and US giant Alcoa came after the world's biggest miner BHP Billiton made an unsolicited takeover bid for Rio Tinto.

Rio Tinto has rejected that offer as significantly undervaluing the company but BHP has continued to argue that the synergies of a merger would be of benefit to shareholders in both companies.

Beijing has expressed concern that BHP's proposal for a merger with its rival would create a behemoth with too much control of world iron ore markets.

Meanwhile, there is debate in Australia about state-controlled Chinese firms -- so-called China Inc -- buying resources firms so they can directly control the resources needed for the country's industrial expansion.

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