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Rio chairman rolls up his sleeves

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Sydney, Australia — MININGREVIEW.COM — 21 April 2009 – Jan du Plessis – the new chairman of the debt-laden Rio Tinto Group – is to meet “unhappy” investors ahead of a vote about Aluminum Corporation of China’s proposed US19.5 billion (R180 billion) investment in the world’s third-largest mining company.

“I will go out of my way to find out what people really think and what people really feel,” du Plessis said after being elected as chairman to succeed Paul Skinner at the company’s general meeting here. The 55-year-old executive, who will meet 25 shareholders in London next month, insisted that he was committed to the deal.

Rio is under attack from shareholders and Australian politicians because the Chinese investment would hand partial ownership of some mines and plants to state-owned Chinalco, as the company is known. Rio’s No. 3 shareholder is calling for an alternative proposal to help it reduce US$38.9 billion (R360 billion) of debt.

“We are as committed to pursuing the Chinalco transaction as we might have been two months ago,” du Plessis said. “It is quite important to keep in mind that although financial markets have improved slightly, the real economy is pretty much where it was two months ago, and arguably possibly in an even worse state.”

Chinalco plans to buy US$7.2 billion (R66 billion) of convertible debt and US$12.3 billion (R113 billion) worth of stakes in projects owned by Rio. It will own 18% of Rio, which has about one-third of its assets in Australia, should it convert the debt.

Rio Chief Executive Tom Albanese said the deal would position Australia to benefit from a relationship “that could define the next few decades,” and boost exports.

Legal & General Group Plc – Rio’s third-largest investor with 4.6% of the stock – has called for an alternative proposal that could be considered by all shareholders. The Association of British Insurers, representing 400 institutional investors, says it is “deeply concerned” by the deal, because it ignored shareholders apart from Chinalco.