Rio Tinto defends Chinalco deal to shareholders

Rio Tinto's chairman defended the firm's tie-up with Chinalco to angry shareholders Monday, calling it the best way to get badly needed funds and playing down worries over China's influence here.

Amid deep scepticism at Rio's annual general meeting in Sydney over the 19.5 billion US dollar deal, outgoing chairman Paul Skinner said Chinalco's investment would shore up the debt-laden mining giant's balance sheet.

"The potential partnership with Chinalco will strengthen our position during this period of extreme uncertainty," he said of the deal, which will be China's largest ever foreign investment if the Australian government approves it.

"It provides the most comprehensive solution to the immediate and medium-term financing challenges we face.

"We believe this is the best option going forward and we are resolved to carry this through."

The deal would see Chinalco double its stake in Rio to 18 percent, taking two seats on the Rio board and stakes in its aluminium, bauxite, copper and iron ore projects.

But there has been political and shareholder opposition to the deal, which comes amid increasing sensitivity about China's quest to secure a firmer hold on natural resources around the globe.

Rio shares fell as much as 4.4 percent on doubts about whether Canberra would give the green light to the politically controversial deal before recovering slightly to close down 2.1 percent at 57.9 dollars (42.57 US).

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