Chinalco's Rio stake caught in Lehman fall-paper

SYDNEY, Oct 16 (Reuters) - Aluminium Corp of China (Chinalco) is in talks with liquidators of collapsed bank Lehman Brothers to free up billions of dollars in shares Chinalco owns in miner Rio Tinto Ltd, a UK newspaper reported. State-owned Chinalco teamed up with U.S. aluminium producer Alcoa in February to buy 12 percent of Rio's London shares for about $14 billion in a move that followed a hostile takeover bid for Rio from rival BHP Billiton . The Daily Telegraph, quoting unnamed sources, said in an article on its Website dated Oct 15 that the Rio shares were now worth around $8 billion and were stuck in a Lehman custodial account in Hong Kong. Chinese authorities were trying to move the shares to another custodian, it said. The row has escalated to senior levels of government, with Beijing putting pressure on Hong Kong to hand over the stake, the Telegraph said. But the liquidator has not released the holding and may decide Chinalco only ranks along with other creditors in the bank's break up. In a worse case scenario, this could see Chinalco suffering a substantial loss on its holding, the paper said. . Source: Thomson Financial News Limited 2008