Miner Rio Tinto scraps Chinalco deal

Anglo-Australian miner Rio Tinto on Friday scrapped its $19.5-billion deal with China’s Chinalco, choosing instead to raise $15.2 billion in a share sale and setting up a joint production venture with rival BHP Billiton.

Rio Tinto Chairman Jan du Plessis said that the planned deal with Chinalco was dead and that his company would pay Chinalco a $195-million break fee, ending what would have been China’s biggest overseas investment to date.

The proposed deal with Chinalco had sparked opposition in Australia, amid concerns that a foreign enterprise would own a strategic stake in the country’s biggest natural resource assets.

The move is a blow to China’s aggressive moves to cement access to resources needed to fuel the country’s rapid growth by taking strategic stakes in major producers.

“Although this deal did not go through, Chinalco’s strategy of internationalizing its mining business has not changed in the least. Chinalco intends to continue developing its global mining and search for strategic opportunities,” the company said in a statement.