Business NEWS

Rio Tinto talking with Chinalco, no deal yet!

By Amarendra Bhushan for CEOWORLD Magazine Updated:February 2, 2009

Anglo-Australian mining giant Rio Tinto held talks with Aluminum Corp. of China, also known as Chinalco, over potential investments that could help Rio pay back some of its heavy debt burden.

- Global miner Rio Tinto Ltd/Plc held talks to sell some assets to Chinese government-owned aluminum maker Chinalco.

- Chinalco, together with Alcoa Inc, bought a 9 percent interest in the London and Australia-listed Rio last year, paying about $14 billion financed by CDB to become its top shareholder.

- Chinalco is its biggest shareholder, reportedly to cut debt by up to $8 billion.

- Looking at a combination of asset sales, convertible notes and share issues that would generate $15 billion in total.

- Lift Chinalco’s Rio stake to more than 11 percent from 9 percent now.

- Rio has $8.9 billion in debt due in October and another $10 billion due in October 2010.

- It would sell potash assets for about $850 million and its Corumba iron ore mine in Brazil for $750 million to Vale.

- At present, Chinalco cannot own more than 14.99 percent of the company, though it could apply for a waiver to raise its stake up to 19.99 percent.

- Rio has close to $39 billion in debt, linked to its acquisition of Canadian aluminum group Alcan in 2007

- Rio hopes to pay off about $10 billion of debt this year by cutting costs, axing 14,000 jobs, and selling businesses.

- So far, it has sold or is selling around $4.7 billion worth of assets.

Rio Tinto response to press speculation

Rio Tinto notes the recent press speculation regarding discussions with Chinalco, an existing shareholder.

As previously announced, the Boards of Rio Tinto are continuing to consider a range of options. In this regard, Rio Tinto confirms that it has held discussions with Chinalco regarding Chinalco acquiring minority interests in various operating businesses of the Rio Tinto group and also investing in convertible instruments.

There can be no certainty that a transaction will ultimately take place and any possible transaction would be conditional upon approval by the shareholders of Rio Tinto and all necessary government and regulatory authorities.

A further announcement will be made as and when appropriate.

About Rio Tinto
Rio Tinto is a leading international mining group headquartered in the UK, combining Rio Tinto plc, a London and NYSE listed company, and Rio Tinto Limited, which is listed on the Australian Securities Exchange.

Rio Tinto’s business is finding, mining, and processing mineral resources. Major products are aluminium, copper, diamonds, energy (coal and uranium), gold, industrial minerals (borax, titanium dioxide, salt, talc) and iron ore. Activities span the world but are strongly represented in Australia and North America with significant businesses in South America, Asia, Europe and southern Africa.

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