Politicians from both ends of the political spectrum have questioned whether Australia is ceding control of its vast natural reserves by allowing state-owned Chinese companies to pump billions of dollars into resource firms.

The issue has been brought into sharp focus by Chinalco's proposed 19.5 billion US dollar investment in Rio Tinto and Minmetals 2.6 billion Australian dollar (1.7 billion US) takeover bid for OZ Metals.

Opponents say they do not object to offshore investment in general but have reservations about allowing a foreign government to control strategically important reserves.

They also say that there is a conflict of interest in such a huge resources customer controlling the firms that supply it.

How, the argument goes, could Rio Tinto insist on the best price for resources such as iron ore when the customers sitting across the negotiating table own a huge stake in their company?

Opposition senator Barnaby Joyce, a member of the conservative, rural-based National Party, said such deals were not in Australia's interest and should be blocked.

"It's the Chinese government that'll be buying Australian mines and it's very hard to say (to the) Chinese government when they're in the door, that you don't like the way they are acting," he told public radio.

"It's nice to keep a little bit of separation between the major person who buys your minerals and the fact we own them."

On the other side of politics, left-leaning Greens senator Bob Brown was even more scathing.

"There is no way the communist autocrats in Beijing would allow an Australian company to buy control of an equivalent Chinese resource," said Brown, a frequent critic of Beijing over Tibet.

"Both Rio Tinto and OZ Minerals are floundering but the Australian mineral resources they control will not disappear if these companies do.

"It is hazardous for our open and democratic nation to have the Beijing dictatorship, which forcefully suppresses democracies, take control of these companies and our resources."

Treasurer Wayne Swan has said little on the issue, other than the government will consider all proposed deals on their merits and the national interest when deciding whether or not to approve them.

He was more forthcoming last July, when Beijing-owned Sinosteel completed the 1.36 billion Australian dollar takeover of iron ore miner Midwest, saying state-owned, or sovereign, entities presented a challenge to regulators.

"The question here is, is it in our national interest for a buyer of our resources to control our resource-producing companies?" he said at the time.

"That's the decision that I have to make."

Swan signalled the government would rigorously examine the Rio deal when he announced tighter rules on foreign investments in Canberra at the same time as Rio and Chinalco executives were unveiling their planned tie-up in London.

Swan met Wednesday with Lou Jiwei, chief executive of Beijing's sovereign wealth fund, China Investment Corporation, to explain how the rules work.

Chinalco president Xiao Yaqing played down the prospect of interference from Beijing when analysts questioned him about the deal, saying commercial rather than political considerations were paramount.

"Despite the fact that we are a state-owned company, I'd like to emphasise that we are run completely independently and commercially," Xiao said.

"All our decisions relating to marketing, production and capital expenditure are made by the management team independently."

But former treasurer Peter Costello said the government needed written, enforceable undertakings before approving any foreign investment deal as verbal assurances counted for nothing.

"Assurances can change as quickly as circumstances," he wrote in Melbourne's Age newspaper.

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