UPDATE 1-Chinalco more likely to raise Rio stake than cut it

    "I feel the price was very good. It was a very appropriate  price. The price was not high considering Rio's value.... in the current circumstances, the possibility of raising the stake is higher than cutting it," Xiao Yaqing said in a group interview in Shanghai.

    Chinalco and U.S. aluminium firm Alcoa Inc <AA.N> jointly purchased 12 percent of Rio's London-listed shares, or 9 percent of the total equity of the firm, on Jan. 31, at an average price of almost 59 pounds per share. The shares closed at 50.61 pounds on Monday.

    Xiao declined to be say how many shares the two firms might buy if they raised their stake and said details were subject to commercial confidentiality. But no move was imminent.

    "Alcoa and Chinalco have not made a plan for the next move  yet," he said. The pair made the initial 12 percent purchase under the terms of a one-month agreement, now expired, that would have allowed a stake of up to 14.9 percent of Rio Tinto's London shares.

    Rio also has a listing in Sydney and, under Australian law, foreigners can buy up to 15 percent of an Australian company before they must seek government approval to buy more.

    Xiao has previously said he has lodged papers with Australian authorities as a courtesy, even though the initial purchase did not involve any Australian shares.

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