Rio Tinto shares rise as it stays committed to Chinalco

Mining Journal reported that Rio Tinto remains committed to a planned USD 19.5 billion tie up with Chinese metals company Chinalco.

The comments came as the US Committee on Foreign Investment cleared the Chinalco deal.

The latest endorsement of Chinalco, already Rio Tinto's largest shareholder, also comes amid speculation the Australian government could demand revisions or kill the deal under foreign investment guidelines because Chinalco is state owned.

Rio Tinto shares closed 7.4% higher at AUD 61.88 in Sydney on last Friday recouping some of a previous heavy slide on market talk it might renegotiate the most controversial part of the deal a USD 7.2 billion issue of convertible bonds to Chinalco.

London shares, which have surged 77% this year gained 2.78% to EUR 26.66 in early trade, in line with the UK mining index.

Speculation had focused on whether Rio Tinto would tweak the bonds issue to make it available to all Rio Tinto shareholders, not just Chinalco, or on whether the deal could be scrapped and another strategic investor brought in, perhaps rival BHP Billiton.
Rio Tinto said in response to a query from the Australian stock market over the movements in its share price that "The company remains committed to delivering this strategic partnership. The deal as it stands would double Chinalco's Rio Tinto stake to 19%.¡±

The Australian Financial Review newspaper said that Chinalco would consider changing the terms of the convertible bonds, but was adamant the other major element of the tie up USD 12.3 billion in direct investments in key Rio Tinto mining assets should remain as agreed in February.

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