Chinalco unsure on Rio Tinto, but won't buy into BHP Billiton

Hong Kong - Aluminium Corporation of China (Chinalco) will not buy into BHP Billiton but could vote in favour of its all-share offer for rival Rio Tinto, president Xiao Yaqing said yesterday. Xiao said Chinalco, the largest shareholder in Anglo-Australian mining house Rio Tinto, had the right to accept or refuse BHP Billiton's offer and had not yet decided the course it would take. "I've got the money in my pocket," he said. "The question is when's the proper time to buy." He added that the decision depended on market prices. He ruled out the idea of buying into BHP Billiton, a theory that gained traction among market analysts after BHP Billiton's chief executive, Marius Kloppers, said in May that he had no doubt Chinese money would eventually feature on the firm's share register. Chinalco, formed five years ago through the consolidation of more than 60 aluminium smelters, bought 12 percent of Rio Tinto's London-listed shares, or 9 percent of the group's total equity, in January, jointly with US aluminium firm Alcoa. The purchase was widely seen as a deliberate move to stymie BHP Billiton's bid, based on Beijing's fear that a tie-up between BHP Billiton and Rio Tinto would create an iron ore giant with unacceptable control over the supply of the crucial resource to China's steel industry. Xiao said his plan was to use the stake as a platform to give Chinalco a global presence. "Our ultimate goal is to internationalise Chinalco," he said. "This will provide … more opportunities in its future." Last month Chinalco gained approval from Australia to raise its combined stake to 14.99 percent of Rio Tinto stock, or about 11 percent of the Rio Group, listed in London and Australia. Xiao said Chinalco's flagship listed subsidiary, Aluminum Corporation of China Limited (Chalco), would cut domestic investment by 20 percent this year because of rising costs. It would start focusing on expanding in areas such as Saudi Arabia and Australia. To cut costs, Chalco is in talks for a number of power projects that should increase its power generation capacity to 50 percent of its needs, from 20 percent now. Chinalco's aluminium interests are grouped together in Chalco. Xiao plans to pool Chinalco's remaining assets, including copper, in another company, which could be listed. Source: Business Report