Melbourne, Australia — MININGREVIEW.COM — 16 February 2009 – Anglo-Australian mining giant Rio Tinto – the world’s third- largest mining company – is confident the Australian government will approve its US$19.5 billion (R195 billion) tie-up with Chinese state-owned aluminium-maker Chinalco, says Rio’s strategy chief.
Reuters reports that, in a controversial deal announced here last week, Chinalco will spend US$12.3 billion (R123 billion) on stakes in nine of Rio’s mining assets, and also buy US$7.2 billion (R720 billion) of convertible Rio debt, which could end up doubling the Chinese firm’s stake in Rio to 18%.
There has been speculation that the Australian government might block the deal, fearing Beijing would have too much influence over a major export earner, but Rio strategy managing director Doug Ritchie said the deal was structured to meet Canberra’s foreign-ownership concerns.
“And we are most confident that the way in which this has been done will more than satisfy the Australian FIRB requirements,” he added, referring to the government’s Foreign Investment Review Board.
In Australia, the deal is subject to approval by the board, Treasurer Wayne Swan and Rio Tinto shareholders.
“We’re very confident that this deal will get up,” he said, adding that the company would break the myth of being subsumed by some Chinese dragon by persuading all shareholders that there were safeguards in place to protect their interests.
Rio needs the deal to help reduce the US$39 billion (R390 billion) in debt it took on in 2007 to buy Canadian aluminium company Alcan when commodities prices hit their peak. The group has nearly US$19 billion (R190 billion) in debt due in the next 20 months.