Rio chairman admits to Alcan regrets

Rio Tinto's outgoing chairman has admitted to having regrets about buying Canadian aluminium producer Alcan, which sparked a massive blow-out in debt for the resources giant. After Rio bought Alcan at the peak of the commodities boom two years ago its debt soared to $US39 billion ($A54.2 billion), forcing the Anglo-Australian miner to undertake a range of measures to help pay off the hefty bill. So far, Rio has sold off assets worth $US2.5 billion ($A3.47 billion), raised $US3.5 billion ($A4.86 billion) from the sale of US dollar bonds and, most controversially, announced a $US19.5 billion ($A27.1 billion) investment deal with Aluminium Corporation of China (Chinalco). Many of Rio's shareholders in Australia and Britain are angry about the proposed Chinalco deal, fearing the Chinese company will exert too much influence if it is allowed to take an 18 per cent interest in Rio and a suite of its mining assets. Hundreds of British shareholders turned out in London on Wednesday to voice their concerns at Rio's annual general meeting. Chairman Paul Skinner and chief executive Tom Albanese tried to allay their fears, insisting the Chinalco deal was the best option for the company. But speaking to reporters after the meeting, Skinner conceded he had regrets about buying Alcan, given how it was bought for $US38.1 billion when aluminium prices were rising but which had since fallen dramatically. "There are some regrets," said Skinner, who will step down as chairman on Monday. "But first, we have no regrets at all about the assets we have acquired and the quality of those assets. "There are aspects, perhaps, of our reading of the future trajectory of aluminium prices which we may have not got entirely right and certainly, perhaps our biggest regret, is that we didn't move faster than we might have done to dispose of those parts of the Alcan portfolio which we had no intention of holding." Skinner said Rio was firmly committed to the Chinalco deal, which requires approval from Australia's Foreign Investment Review Board, Treasurer Wayne Swan and the resource company's British and Australian shareholders. Australian shareholders are expected to voice similar concerns about the tie-up to their British counterparts when Rio holds its annual meeting in Sydney on Monday. Skinner expressed confidence that despite some strong opposition from some major shareholders, the deal would go ahead. "I am not sure that the weight of opinion is against the deal," he said, adding that Rio was passing on shareholders' concerns to Chinalco. "We remain confident that we will succeed in getting support for this transaction." Albanese said the Chinalco deal, which has sparked a fierce political debate about foreign ownership in Australia, should be compared to how Japanese and other Asian interests boosted their investments in Australia in the past three decades. "I think there's a recognition in Australia, it's a very important and healthy debate, that Australia ... is long on resources and short on capital," he told reporters. "It does require and has required over the past several decades access to foreign capital to develop its mines, to develop its infrastructure to develop its overall investment universe. "Certainly during the 70s and 80s, similar types of debates took place with respect to Japanese investment in Australia and I think part of this is just reminding people of the fact that this is one more phase of foreign investment activity into Australia.