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Chinalco debunks sealed deal with Rio Tinto

(Xinhua)
Updated: 2009-02-03 18:19

BEIJING -- The China Aluminum Corporation, or Chinalco, Tuesday denied reports that it has reached a deal to increase its stake in mining giant Rio Tinto Group.

A road train arrives at Rio Tinto's Dampier Salt Limited production facility at Port Hedland, north of Perth May 27, 2008. The China Aluminum Corporation, or Chinalco, Tuesday denied reports that it has reached a deal to increase its stake in mining giant Rio Tinto Group. [Agencies]

The two companies had been in talks about Chinalco purchasing assets of the Rio Tinto Group, but no deal had been made, said Chinalco vice president Lu Youqing.

Related readings:  Chinalco to reduce wages  Chinalco may raise stake in Rio Tinto  Rio Tinto in asset sale talks with Chinalco  BHP abandons $90 billion bid for Rio Tinto

The response came after media reports on Monday that Chinalco had agreed to acquire minority stakes in mines worth up to US$8 billion while Rio would issue a convertible bond worth about US$15 billion to Chinalco, which would up its stake to 15 percent.

There were also reports that Chinalco had held talks with China Development Bank over raising funds for a deal with Rio.

Lu declined to disclose which bank the company would use and said all the details, such as the scale of capital injection and the method of cooperation, were still under negotiation.

"Money will not be a problem to cooperation between the two sides," Lu said.

"There is no certainty of an agreement with Rio because it is also talking to other people," Lu said. Chinalco had adequate capital and was looking for investment opportunities abroad.

Chinalco's listed subsidiary, the Aluminum Corporation of China (Chalco), in a statement Tuesday to the Shanghai Stock Exchange Market denied media reports that Chalco planned to increase its stake in Rio Tinto to 15 percent.

Chinalco, Chalco's parent company, was Rio's biggest shareholder.

Rio Tinto has been forced to cut US$10 billion in debt by the end of 2009 by reducing spending, cutting about 14,000 jobs worldwide and increasing assets sales to combat the financial crisis.

In January last year, Chinalco and US aluminum producer Alcoa jointly bought a 12-percent stake in London-listed Rio Tinto PLC for US$14 billion.

Investors had concerns over Rio's huge debt after the Melbourne-based BHP abandoned its 62-billion-US-dollar takeover bid in November. By the end of October, the company's net debt stood at US$38.9 billion.