Some Rio investors warm to Chinalco

Major shareholders in Rio Tinto are still expressing opposition to the deal with Chinalco on the basis that it ignores pre-emption rights, but not all shareholders are opposed to the investment.

The mining giant holds its annual general meeting on Wednesday and, although no resolution on the Chinalco deal is scheduled, investors are expected to be vocal regarding the proposed $19.5bn (?13.1bn) investment from the state-controlled Chinese group.

Scottish Widows Investment Partnership and Legal & General have both publicly expressed their opposition. However, Navaneel Ray, managing director at US asset manager TIAA-CREF, said that a "silent majority", which had yet to speak, could vote in favour of the deal.

Private clients are also more likely to favour a tie up with Chinalco rather than a rights issue. Iain Armstrong, mining analyst at Brewin Dolphin, said that his company's clients were "very concerned about income" particularly with interest rates being so low ¨C so a rights issue that ate up capital was not in their interest. Brewin manages accounts for individual Rio shareholders.

Pension Investment Research Consultants (PIRC), which provides advice to UK shareholders, has advised voting against the group's remuneration policy. PIRC argued that "excessiveness" was a concern in light of the 2008 integration bonus given to Dick Evens, the ex-chief executive of Rio Tinto's aluminium unit, of $1.35m. The company will also publish its first-quarter production report, which should show a marked year on year fall in output.

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