Chinalco: Rio Tinto stake not hurt by Lehman woes

SHANGHAI, China - Aluminum Corp. of China's stake in mining giant Rio Tinto PLC is safe even though it is held by a unit of defunct investment bank Lehman Brothers, the company said Friday. The company, also known as Chinalco, was responding to media reports speculating that the 12 percent stake in Rio Tinto that it has taken with U.S. aluminum maker Alcoa may have been frozen as part of the Lehman Brothers liquidation process. Chinalco said its Rio Tinto shares are kept in a separate designated account under a custody arrangement with Lehman Brothers International (Europe). "There is no basis on which Chinalco's ownership of the shares could be validly challenged or on which its shares could form part of the general assets of LBIE," said the statement, posted on Chinalco's Web site. "Chinalco is discussing with the Administrators of LBIE in London the arrangements for the orderly transfer of the Shares out of LBIE," it said. The speculation over Chinalco's shares in Rio Tinto arose after Guernsey-based investment firm Olivant Ltd., said could not locate its 2.78 percent stake in Swiss bank UBS AG, which was held through Lehman Brothers. Chinalco teamed up with Alcoa earlier this year to buy a 12 percent stake in Rio Tinto's London-listed unit for about US$14 billion, in a move seen as an attempt to block a takeover bid by rival BHP Billiton. The Chinese company recently won Australian government approval for the share purchase, the biggest ever offshore investment by a Chinese company. Rio Tinto has been fending off a takeover proposal from BHP Billiton, the world's largest miner. Chinalco says its interest in Rio Tinto is a strategic investment, although Beijing has expressed unease over a union of the two huge mining groups, saying it might give them excessive control over iron ore pricing. Chinalco's Hong Kong-traded shares were up 1.5 percent at 3.35 Hong Kong dollars in early trading Friday. Source: Reuters