Australia extends probe of Chinalco-Rio deal: source

MELBOURNE (Reuters) - Australia's Foreign Investment Board will extend its review of top Chinese aluminum maker Chinalco's $19.5 billion investment in global miner Rio Tinto , a source briefed on the discussions said on Monday. Rio Tinto was not immediately available for comment. A spokesman for Chinalco could not comment. Under the deal, announced last month, Chinalco would pay $12.3 billion for stakes in debt-saddled Rio's key iron ore, copper and aluminum assets and $7.3 billion for convertible notes that could double its equity stake in Rio to 18 percent. The Foreign Investment Review Board is studying the controversial deal and must make a recommendation to the government on whether it is in the national interest. Australian Treasurer Wayne Swan will make the final decision. The initial 30-day review period ended on the weekend. The extension had been expected given the complexity of the deal, which involves giving Chinalco two board seats and setting up joint ventures. FIRB will put an interim order in a government gazette on Monday indicating the review will be extended by 90 days, which would delay a final decision by Swan, and hold up a vote by Rio Tinto's shareholders. Rio had aimed to complete the deal by July. The longer it takes for the controversial deal to go ahead, the tougher it will be for shareholders to reject it as global economic conditions worsen, commodities prices slide, and Rio grows more desperate to cut its $39 billion debt.