Rio Tinto’s US$19.5 billion ($24.4 billion) deal with Chinese resources giant Chinalco has reportedly fallen through.
There is speculation that Rio Tinto will walk away from Chinalco and instead seal a joint venture with BHP Billiton, involving their iron ore operations in the Pilbara region of Western Australia.
Rio Tinto this morning requested a trading halt from the Australian Securities Exchange until it makes a formal announcement regarding the deal.
According to various reports, Rio Tinto has told Chinalco it cannot proceed with the deal, and will raise funds to help pay down debts by asking the existing shareholders for up to US$15 billion ($18.8 billion.)
“Rio is pursuing a range of options, some of which are at an advanced stage, for maximising shareholder value and improving the Group's capital structure,” the miner said in a statement.
The Rio Tinto board was meeting in London overnight and an announcement on the state of the talks with Chinalco is expected as early as this morning.
Chinalco refused to comment yesterday on its talks with Rio Tinto, and refused to say whether it would go ahead with the Rio transaction.
The deal’s collapse will spare the Rudd Government from making a tough foreign policy decision. Many MP’s and Rio Tinto shareholders have been opposed to the deal from the beginning.
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