Rio sell-out row rumbles on after deal is defended

Rio has raised $19.5 billion (£13.6 billion) of much-needed money to start clearing its post-Alcan acquisition debt mountain,

It sold $12.3 billion of minority positions in two of its top assets, the Hammersley iron ore mine in Australia and the Escondida copper mine in Chile to Chinalco, the state-owned Chinese metals giant.

It raised a further $7.2 billion selling convertible bonds to the Chinese, which if converted into equity could see Chinalco's stake in Rio double from 9% to 18%.

Leading investors queued up to rubbish the deal with some complaining that Rio had breached the fundamental pre-emption principle of the London stock market, that existing investors should have the right to participate in a fundraising which would otherwise dilute their interests.

Other critics said Rio was losing control of its best assets at the bottom of the market and that getting into bed with the Chinese meant it is diluting its own pricing power in what is to become the most important market for metals in the world.

Canaccord Adams analyst Damien Hackett defended Rio, saying it had "road-tested" its plans with major shareholders and there had been no better fundraising offer on the table. The shares were 19p up today at 1958p.