Rio hit again as investors snub Chinalco

MINING giant Rio Tinto came under fire again yesterday over its controversial proposed tie-up with Chinalco.<br /><br />In the latest in a series of criticisms from shareholders and the Australian government, investors in Sydney called for changes to the proposed $19.5bn (&pound;13.6bn) tie-up with the Chinese state-owned aluminium company.<br /><br />Shareholders object to the stake which Chinalco could take in some of Rio&rsquo;s key assets. They are also concerned that the company would gain convertible notes, which would double its equity stake to 18 per cent.<br /><br />Chinalco has been firm in its offer, saying the money it intends to pay, which will help Rio pay off its debt mountain, comes as part of a package, and is not flexible.<br /><br />But rumours abounded yesterday that Chinalco was considering altering its package.<br /><br />Neither company was available for comment.<br /><br />Newly appointed Rio chairman Jan du Plessis is touring the UK and Australia, talking to shareholders of the dual-listed company, and assessing investor enthusiasm.<br /><br />Several of Rio&rsquo;s big UK shareholders have also voiced opposition, saying the convertible note issue favours Chinalco at their expense.<br /><br />They have pushed alternative plans, including a rights issue and a tie-up with bigger mining rival BHP Billiton.<br /><br />Before shareholders can vote on whether to go ahead with the tie-up with Chinalco, it must pass through Australia&rsquo;s Foreign Investment Review Board (FIRB).<br /><br />A decision from the government is due around 15 June. The board then needs a 50 per cent approval from investors to go ahead.