A giant Chinese aluminum company is in discussions to buy a minority stake in either Ivanhoe Mines Ltd. or its Oyu Tolgoi copper-gold project in Mongolia.
The news, which has been rumoured for months, was confirmed in a regulatory filing made by Rio Tinto Ltd. on Wednesday.
Rio said that it is "ongoing" talks with Aluminum Corp. of China, or Chinalco, regarding financing for Ivanhoe and Oyu Tolgoi. Additionally, it has held talks with the European Bank for Reconstruction and Development and the International Financial Finance Corp. regarding Oyu Tolgoi.
The project ranks as one of the biggest undeveloped copper resources in the world, but Ivanhoe needs to raise a massive amount of money in order to finance the estimated US$4.6-billion construction cost.
As a result, Ivanhoe and Rio Tinto, its strategic investor, have been seeking out third parties that could provide that financing.
Rio and Chinese state-owned Chinalco have a complicated history. In early 2009, Rio accepted a US$19.5-billion investment from Chinalco as it tried to deal with a massive debt load. However, shareholders turned against the deal and it fell apart, angering the Chinese government. The two companies later agreed to work together to pursue business opportunities.
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