Chinalco Approved to Buy Rio Tinto Stake
08-25 14:59 Caijing
Chinalco gets the green light from the Australian treasury to purchase a 14.99 percent stake in Rio Tinto PLC.
By staff reporter Yan Jiangning
The
Aluminum Corporation of China (Chinalco) has won the approval from Australian
government to purchase Australian miner Rio Tinto's London-listed
shares.
Australia's Federal Treasurer Wayne Swan said August 24 that the
government would permit Chinalco, China's largest aluminum producer, to buy up
to 14.99 percent of the shares in Rio Tinto PLC, the arm of Rio Tinto Group
listed on the London Stock Exchange.
The shares would equate to an
11-percent stake in the mining company's combined Australian and London
equities.
The Rio Tinto purchase has been long in the making. On January
31, Chinalco, allied with the Aluminum Company of America (Alcoa), announced
plans to buy 12 percent of Rio Tinto's London-listed shares for US＄ 14 billion.
The acquisition would have given the company a 9-percent stake of Rio Tinto
Group.
However, the original deal didn’t receive approval from the
Australian treasury. Facing concerns over foreign investment in the country's
resources industry, Australian Prime Minister Kevin Rudd said February 5 that
the government was examining the deal according to "national
interest."
According to Treasurer Swan, the deal is finally approved on
the condition that Chinalco not to raise its share in Rio Tinto PLC above 14.99
percent. Moreover, Chinalco also agreed not to seek board representation in Rio
Tinto as long as its holdings were below 15 percent.
"I have determined
that the undertakings agreed upon with Chinalco are acceptable for protecting
the national interest in this matter," said Swan. He added that if Chinalco
wants to further increase its share in Rio Tinto, it must submit new application
to the government and wait for assessment according to Australia's Foreign
Acquisition and Takeovers Acts.
In an August 9 interview with Caijing,
Rio Tinto CEO Tom Albanese said he would be glad to see Chinalco increase its
stake in Rio Tinto, which he believed would show "shareholder’s confidence of on
Rio Tinto."
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