Rio shares surge over Chinese deal

My Account
Logout

Create an Evening Standard Account

Use your social network

Save time by using your existing account to sign in to Evening Standard

We'll never share your information or post anything to your account without your permission

Welcome! Sign in here

Use your social network

Save time by using your existing account to sign in to Evening Standard

We'll never share your information or post anything to your account without your permission

Forgot your password ?

Registration

* indicates fields that are mandatory

Email *

Password *

Confirm Password *

First name *

Surname *

Postcode *

Country *

Mobile phone number

Username *

Gender *

Year of birth *

When you sign up...

You will have access to all our online competitions, discounted offers and can post comments on our site.

You will also receive The Weekender newsletter sent every Thursday - it’s full of fantastic offers and ideas for the weekend. You can update your email preferences in your account page when you log in.

Other newsletters and emails

Homes & Property Newsletter - Yes I want to receive the weekly email with all the latest news on property in the capital

Occasionally we would also like to send you relevant emails detailing specific offers either from ourselves or carefully selected partners. If you would prefer not to receive these then please tick the appropriate boxes below. We will never pass on your details.

I do not want to receive additional offers and information from the Evening Standard

I do not want to receive additional offers and information sent by Evening Standard on behalf of carefully selected partners

Terms and Conditions

* I have read, understood and agree to be bound by the terms and conditions of Evening Standard

Registration

Mail Sent for Registration Confirmation.

A confirmation email has been sent. Please activate your account by clicking on the activation link sent in your mail box.

Rio is scrabbling to cut debt amid crashing demand and prices.

It confirmed that it was in talks with Aluminum Corp of China, or Chinalco, its largest shareholder, which may buy convertible debt in Rio or direct stakes in some of its businesses.

Reports suggest Chinalco will increase its holding to 18% and buy 14% of Rio's Australian-listed shares under the plan.

Rio's debts stand at about $38.9 billion (£27.1 billion), accumulated largely to fund the purchase of Alcan last year.

"The boards [in London and Melbourne] of Rio Tinto are continuing to consider a range of options," the company said.

It said that it had held talks with Chinalco "regarding Chinalco acquiring minority interests in various operating businesses of the Rio Tinto group and also investing in convertible instruments".

Chief executive Tom Albanese, who fought off a takeover offer from arch-rival BHP Billiton, is facing the biggest commodity price plunge in 50 years. Rio's debt soared 1900% on the Alcan acquisition, just as the demand for aluminium began to slide.

"Rio bought an asset at the top of the market, took on too much debt and now they're paying for it," Brad Shallard of Katana Capital in Perth told Bloomberg. "Chinalco would have the whip hand in any deal."

The planned sale of assets and a convertible note may raise as much as $15 billion for Rio.

Chinalco signalled in September that it could raise its stake in Rio. Vice President Lu Youqing said in November that Chinalco had a cash pile of as much as 60 billion yuan (£6.1 billion).

Rio's pain could be China's gain. "China is short of copper, alumina and iron ore and they are the commodities they would look to acquire," said Glyn Lawcock, head of resources research at UBS in Sydney. "This is a once in a lifetime opportunity for China."