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Chinalco chief says fears over Rio Tinto control unfounded

THE new chief of Aluminum Corp of China, also known as Chinalco, said yesterday that plans to double its stake in Rio Tinto would not give it control over the prices charged by the global miner.

Chinalco President Xiong Weiping's comments at a news briefing in Sydney were aimed at allaying fears the company would have too much influence over Rio Tinto if the US$19.5 billion investment plan goes ahead.

"This transaction will in no way lead to any control of the natural resources in Australia," Xiong said.

He said he would be meeting foreign-investment regulators in Canberra to discuss the deal, which requires approval of investors and the Foreign Investment Review Board.

Treasurer Wayne Swan, Australia's top finance official, has said that the deal would only receive approval if it is judged to be in national interest.

Chinalco announced last month that it would invest US$12.3 billion in joint investments in aluminum, copper and ore mining with Rio Tinto, and would spend US$7.2 billion on convertible bonds in the company. If redeemed for shares the bonds would almost double Chinalco's existing 9.3 percent stake in Rio Tinto Group to 18 percent.

"Our partnership will in no way change the corporate strategy of Rio Tinto, or the way it operates its business, or the pricing of its product," Xiong said.

London-based Rio Tinto is the world's third-largest miner. The company is slashing production and jobs worldwide to lower its debt.

Xiong said that Chinalco had no immediate plans to increase its planned stake in Rio Tinto or to sell any of its assets in the company.

He said he hoped that the Australian government would approve the deal. The deal would be China's biggest overseas investment so far.

Xiong said the deal would benefit both Chinalco and Rio Tinto, but warned that the global financial crisis still had some time to run.

"We remain confident in the long-term prospects of Rio Tinto and the prospect of achieving a long term return on this investment," he said. "However, we must say that there is no bottom seen here yet in terms of the economic situation globally and the global mining sector remains in a very volatile situation."


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