Rio Tinto Reiterates Commitment to Chinalco Deal

April 8 (Bloomberg) -- Rio Tinto Group, the world’s third- largest mining company, is continuing with a proposed $19.5 billion investment from Aluminum Corp. of China amid concern the deal won’t proceed. Rio “reiterates its commitment to delivering this strategic partnership and will otherwise carry on its business in its usual course,” the London-based company said today in a statement to the Australian stock exchange in response to a share-price inquiry. The debt-laden company’s Sydney-traded shares yesterday dropped the most in four months on concern it may sell shares at a discount should the deal with state-owned Chinalco fail. The proposal needs approval from regulators and shareholders and has drawn fire from lawmakers in Australia and institutions. “Logically, if you look at the deal, the Australian government should pass it through,” Hugh Young, who oversees about $37 billion as managing director of Aberdeen Asset Management Plc’s Asian unit, said today on Bloomberg Television. Rio declined 0.7 percent to A$52.81 at the 4:10 p.m. Sydney time close on the Australian stock exchange. The company has made plans for an $8 billion share sale in case the Chinalco accord falls through, the Sunday Times said April 4, giving no source for the information. Rio, which needs to cut $38.7 billion of debt, said today it noted the recent speculation about alternatives to the deal. “Considering the mess they got themselves into, this deal is quite a clever way of extracting them,” Aberdeen’s Young said. “It might be accompanied at a later date, if it does go through, by a rights issue. We have had issues, along with other institutional investors, about the lack of pre-emptive rights to be given to existing investors.”