Chinese get seats on Rio committees

THE Chinese metals group Chinalco will be given seats on three key board committees of Rio Tinto as part of its controversial $19.5 billion (?13.5 billion) investment in the group. Directors nominated by Chinalco, owned by the Chinese state, will sit on the audit, remuneration and appointments committees. A majority of the members of each committee will continue to be independent nonexecutive directors. The details of the board arrangements are contained in a 600-page agreement between the parties that sets out how the complicated investment and joint-venture arrangements will work. Under the deal Chinalco will take stakes in several of Rio’s largest mining operations and increase its stake in the group to just under 15%. Rio shareholders have protested, saying the agreement undermines their preemption rights – where existing shareholders are given first refusal when new shares are issued to raise funds. They will have an opportunity to voice their criticism at Rio’s annual meeting on April 15. Rio’s plans have also come under fire in Australia, where commentators have questioned whether a foreign investor should be given stakes in key natural resources. Australian stock-exchange regulations mean that Rio directors are also expected to appoint an external adviser to provide a report on whether the Chinalco deal meets independence tests. In the meantime, Rio has promised to keep Chinalco closely informed about the assets in which it is planning to invest.