FEARS of a massive shareholder revolt prompted mining giant Rio Tinto to dramatically call off a $19.5bn (£13.7bn) tie-up deal with Chinese shareholder Chinalco last night.<br /><br />The decision raises questions about the long-term future of chief executive Tom Albanese, the architect of the controversial Chinese deal. <br /><br />He has been criticised by shareholders for breaching pre-emption rights and by industrialists for giving too much influence to the Chinese, who are huge customers of the group’s products.<br /><br />Rio chairman Jan du Plessis is believed to be supportive of Albanese but some doubt whether that will be enough to save him, given the scale of anger over the deal, which Albanese was pushing despite opposition from shareholders – and some board members. <br /><br />The company, which has been working on the deal for months, decided yesterday it did not want to face a vote of up to 40 per cent against the deal at its upcoming extraordinary meeting.<br /><br />The dual-listed miner is expected to announce a $10bn rights issue this morning in a bid to strengthen its balance sheet. The rights issue will go some way to appeasing seething investors.<br /><br />Credit Suisse’s James Leigh-Pemberton is the lead adviser on the rights issue.<br /><br />The Association of British Insurers (ABI), which had threatened to issue a rare red top investor alert over the controversial deal said last night: “We’ve consistently said a rights issue is the right approach, and this has become more consistently the case.”<br /><br />Shareholders in both Sydney and London, where the miner is listed, had expressed dismay that Rio struck a deal with the Chinese state.<br /><br /><strong>RIO ADOPTS LENG’S SOLUTION IN THE END <br />BY DAVID HELLIER</strong><br />EVEN his harshest critic could have excused Jim Leng for feeling vindicated yesterday by Rio’s decision to walk away from its controversial deal with Chinalco.<br /><br />Leng, the former boss of steel group Corus, took a mighty gamble when he decided not to take up the chair at Rio back in February because of his objections to the deal.<br /><br />At the time, Rio sources, embarrassed by his decision, painted him as a mistaken maverick. Now he is looking like the one who got it right all along. <br /><br />After visiting China and speaking to many of the group’s largest shareholders, Leng decided to quit because he felt the group needed a “financial solution” to its debt issues via a rights issue, not a “strategic” one.<br /><br />That is what Rio will now be getting.<br /><br /><strong>TIMELINE: TOM ALBANESE AT RIO</strong><br /><strong>1993</strong><br />Tom Albanese joins Rio Tinto, during the miner’s acquisition of Nerco, as a manager.<br /><br /><strong>May 07</strong><br />Albanese later takes over as chief executive from Leigh Clifford.<br /><br /><strong>July 07</strong><br />Rio acquires Canadian aluminium producer Alcan for $38.1bn (£23.6bn). Albanese rejects critisism that it paid too much for the group, saying China's skyrocketing demand for metals justified the takeover plan. Rio is left with a $40bn debt mountain.<br /><br /><strong>February 08</strong><br />Chinalco teams up with US aluminium giant Alcoa to buy a 9 per cent stake in Rio Tinto for $14.05bn.<br /><br /><strong>February 08</strong><br />Marius Kloppers, head of rival miner BHP Billiton, makes a hostile bid for Rio just one day before a regulatory deadline set by the UK Takeover Panel. <br /><br /><strong>November 08</strong><br />BHP Billiton calls off its bid for Rio, blaming falling commodity prices and regulatory demands that it sell off assets.<br /><br /><strong>December 08</strong><br />Rio Tinto axes 14,000 jobs and shelves $5bn (£3.4bn) of new projects in a bid for survival in the face of falling commodity prices.<br /><br /><strong>February 09</strong><br />Rio strikes up a $19.5bn (£12bn) deal with Chinalco in exchange for up to 18 per cent of a stake in Rio, and a slice of its most valuable assets. <br /><br /><strong>June 09</strong><br />Rio dramatically calls off the deal with Chinalco over fears it won’t get enough shareholder support for the tie-up.