State-owned Chinese aluminium firm Chinalco is in talks with China Development Bank to secure financing for a potential deal with mining giant Rio Tinto, two sources with direct knowledge of the situation said.
Rio Tinto said earlier today that it has held talks with Chinalco, its biggest shareholder, to sell some assets reportedly worth up to $8 billion to cut its debt, but it added that a deal was not definite.
Chinalco - parent of listed aluminium producer Chalco - teamed with US aluminium firm Alcoa last year to buy about 9 per cent of Rio Tinto for $14 billion. That purchase was financed by China Development Bank, which helps finance major overseas deals by Chinese firms.
Since then, the investment has lost about 75 per cent of its value.
"CDB is involved in the situation because Chinalco needs CDB's support for loans as it did for the first deal," said one of the sources, who asked not to be named due to the sensitive nature of the process.
"Now the two parties are working together to review different options for a possible deal with Rio to protect interests of Chinalco as a minority shareholder," the source told Reuters.
But any deal would be subject to government scrutiny and would require approval from China's State Council, the source added. CDB declined comment.
In November, Chinalco said it planned to lift its stake in Rio Tinto to at least 14.99 per cent.
Reuters
