Australian Foundation Concerned by Chinalco, Rio Deal

March 16 (Bloomberg) -- Australian Foundation Investment Co. said it’s “deeply concerned” by the proposed $19.5 billion investment by Aluminum Corp. of China, or Chinalco, in Rio Tinto Group, the world’s third-largest mining company. “Significant influence has been given to Chinalco with no premium paid,” Melbourne-based Australian Foundation said today in a shareholder presentation sent to the Australian stock exchange. The proposed deal raised potential conflicts of interest over investment decisions, it said. State-owned Chinalco agreed last month to buy convertible bonds sold by Rio and stakes in the company’s projects that include Australian and Chilean iron-ore and copper mines. Legal & General Plc, the second-largest institutional shareholder in Rio’s U.K. shares, has called for an alternative proposal. “We are deeply concerned about Chinalco becoming involved with the running of the business,” the fund said. “We are assessing the proposal from the perspective of being a long-term investor.” To contact the reporter on this story: Madelene Pearson in Melbourne on mpearson1@bloomberg.net