Rio shareholders unhappy with Chinalco

Angry Rio Tinto Ltd shareholders have labelled as "completely wrong" suggestions by chief executive Tom Albanese that investors are warming to the Chinalco deal.

London-based Mr Albanese is in Australia meeting investors in Sydney and Melbourne and told analysts on Tuesday that initial shareholder opposition in the UK appeared to be moderating.

However, a major unidentified institutional shareholder in London told The Daily Telegraph the claims were "completely wrong" and that a number of institutions would still vote against the deal.

Chinalco has agreed to pay $US12.3 billion ($A18.95 billion) for a number of Rio Tinto's iron ore, aluminium, bauxite and copper assets, and provide $US7.2 billion ($A11.09 billion) for convertible bonds.

Rio Tinto's board has recommended the transaction unanimously, allowing Chinalco to appoint two new non-executive board members and increase the company's stake in the dual-listed miner from nine per cent to 18 per cent.

The $US19.5 billion ($A30.05 billion) transaction with Chinalco drew the ire of Rio Tinto's British investors, who expressed disquiet over not being offered the chance to participate in a rights issue.

Mr Albanese told Sydney-based analysts that the quantum of the Chinalco deal makes it more attractive than other options, including a $US10 billion ($A15.41 billion) rights issue, the greater the economic uncertainty becomes.

Ironically, Mr Albanese told analysts that Rio Tinto directors are "listening to shareholders".

Rio Tinto will use the capital injection to help tackle the $US38 billion ($A58.55 billion) mountain of debt it incurred buying Canadian aluminium producer Alcan Inc in 2007.

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