Aluminum Corporation of China
State-owned Aluminum Corporation of China (Chinaco) is the holding company for the world’s second largest aluminia producer and the third largest primary aluminum producer. Aluminum Corporation of China Limited (Chinalco) is listed on the New York, Hong Kong and Shanghai stock exchanges.
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Chinalco to buy 15 percent stake in key Rio asset
Aluminium Corp. of China (Chinalco) is to buy 15 percent of Rio Tinto's much sought after Hamersley iron ore asset in Western Australia for US$5.2bn, as part of a rescue package that could see it paying as much as US$12.3bn to secure a series of Rio's key assets.
The two companies will also establish a joint venture in order to sell 30 percent of the 110m tons/year asset's iron ore into China. Rio will retain full control of iron ore sales however analysts say that its poisition in iron ore price talks will be compromised.
It has not yet been annoucned whether the agreement will be based on long term contracts of spot sales iron ore pricing. In such a case, the large volume could also play a huge role in detertmining spot prices in China.
The deal, which also comprises of US$7.2bn in convertible bonds, will up Chinalco's stake in debt-ridden Rio from 9.3 to 18 per cent, sparking an loud backlash from some UK shareholders. The deal wiil need to be approved by 50 percent of shareholders.
The go-ahead has yet to be given by the Australian regulators. BHP Hilton, which had attempted to take over Rio, is likely to lobby the Australian government to disapprove the deal on the grounds that future synergies in Australia's iron ore sector will be lost. It may also mean that Rio would get preferential treatment in China.
Chinalco (601600,SH; 02600,HK) jumped 8.8 percent on Shanghai trading and 3.3 percent in Hong Kong.
Rio dropped 1.9 percent in Austrtalia after a trading halt yesterday.
Other Aluminum Corporation of China news
- Chinalco takes $1.5bn Rio shares
2009-07-02
