Alcoa, Chinese firm to buy stake in Rio Tinto

From the Associated Press

Alcoa Inc. and Aluminum Corp. of China say they plan to buy 12% of Rio Tinto in a deal valued at $14 billion.

It is the biggest foreign investment yet by a Chinese company, Chinalco said Friday, and appears to be meant to block a bid for London-based Rio Tinto by Australian mining giant BHP Billiton. Alcoa said it contributed $1.2 billion to the deal.

Beijing-based Chinalco, the country's biggest maker of both aluminum and alumina, said it made its purchase through its Shining Prospect subsidiary.

Neither Pittsburgh-based Alcoa nor Chinalco "currently intend to make an offer for Rio Tinto," though they reserved the right to participate in an offer within the next six months.

"Our acquisition of a significant strategic stake in Rio Tinto PLC today reflects our confidence in the long-term prospects for the rapidly evolving global mining sector," Chinalco President Xiao Yaqing said.

Rio Tinto became the world's biggest producer of aluminum and bauxite with its $39.7-billion purchase last year of Canada's Alcands.

Like many major Chinese industry groups, Chinalco has been rapidly expanding internationally, acquiring assets in Australia, Canada, Peru, Fiji and Guinea.

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