Rio CEO says Chinalco stake bolsters BHP rejection

TORONTO - The recent purchase by Chinese aluminum group Chinalco of a stake in world No. 2 miner Rio Tinto (RIO.L)(RIO.AX) adds fire power to Rio's rejection of BHP Billiton's (BLT.L)(BHP.AX) hostile takeover bid, Rio Tinto's top executive said on Wednesday. Rio Tinto has rejected BHP Billiton's $147.4 billion offer on the grounds that in understates Rio's worth. "I see this as a strategic investment that (Chinalco) have made, and it reinforces the value message that we have been saying from the beginning," Rio Chief Executive Tom Albanese told reporters in Toronto after a speech to a mining conference. Chinese aluminum group Chinalco and U.S. firm Alcoa Inc (AA.N) surprised markets last month by taking a 12-percent, $14-billion stake in Rio Tinto. Chinalco's chairman has said his company has no plans at this stage to increase its stake beyond that. "Chinalco's investment in Rio Tinto was unsolicited and unexpected ... and they don't seek the influence of management, they don't seek to put a person on the board," Albanese said on the sidelines of the Prospectors and Developers Association of Canada convention. BHP is offering 3.4 of its shares for every Rio Tinto share, a sweetened offer valued at $147.4 billion when it was formally made in early February. Rio has consistently said the offer from its bigger Australian rival is too low, and Albanese said on Wednesday the company's positions in iron ore and aluminum, as well as its 2007 financial results, show "the momentum continues to favor Rio Tinto, and time will continue to favor Rio Tinto."