Chinalco May Win Rio Deal Approval, Citigroup Says (Update1)

Aluminum Corp. of China, pursuing a $19.5 billion investment in Rio Tinto Group, may win Australian regulatory approval by reducing the convertible bond purchase and the number of directors it nominates, Citigroup Inc. said.

Australian Treasurer Wayne Swan may cut the Rio bond sale to $4.8 billion from $7.2 billion, analysts led by Clarke Wilkins said. Chinalco, as the state-owned Chinese company is known, may also be limited to appointing one director, instead of two, he said.

Rio, the world¡¯s third-biggest mining company, is under attack from Australian politicians because the investment plan would hand partial ownership of some mines and plants to Chinalco, and give the Chinese company an 18 percent stake with the debt conversion. Swan may limit Chinalco¡¯s shareholding to 15 percent with the bond sale reduction, Citigroup said.

¡°If the treasurer¡¯s approval is forthcoming and the conditions are not too onerous, the deal could still be completed early in the third quarter,¡± Citigroup said.

Rio rose 1.2 percent to A$58.05 at the 4:10 p.m. Sydney time close on the Australian stock exchange. It has risen 12 percent since announcing the Chinalco deal on Feb. 12.

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