From Caijing Online

The Aluminum Corporation of China (Chinalco), the country's largest aluminum producer, is likely to appoint a former executive to replace its current general manager Xiao Yaping, who has successfully led the company to make a major investment in Australia miner Rio Tinto.

Market rumor has circulated that Xiao Yaping is to step down from his post in the state-owned aluminum producer, with Xiong Weiping, a former Chinalco executive, being brought back to replace Xiao.

The 52-year-old Xiong joined Chinalco in 2000, serving as president between 2004 and 2006. He is currently vice-chairman and general manager of China Travel International Investment Hong Kong Ltd.  

Xiao will also step down as chairman of Chinalco's listed arm (SSE: 601600, HKSE: 02600).

A source closed to the action told Caijing that the appointment was announced to the board last week but hasn't been officially released.

However, Yuan Li, a manager from Chinalco, said February 9 that the company didn't hold any meeting concerning a management reshuffle last week, adding that no "information about Xiao's departure was formally announced."

A third source told Caijing that the appointment is scheduled to be announced publicly on February 15.

Rumors about the possible new appointment compelled Chinalco to suspend trading of its shares in Hong Kong and Shanghai on February 10. In a statement given to the Shanghai Stock Exchange, the company said it needed to clarify media reports.

Expansion Efforts

Xiao has been at the helm of Chinalco since 2004, growing the company from seven plants into the world's third largest aluminum producer with more than 50 subsidiaries.

Much of the growth has come from a series of domestic and overseas acquisitions Xiao pushed forward over the past few years. In August 2007, Chinalco paid US$ 860 million to buy a 100 percent stake in Canadian Peru Copper Inc., the world's ninth largest copper reserve. And in October, the company acquired 49 percent of Yunnan Copper for 9.5 billion yuan.

In January 2008, Chinalco joined hands with Alcoa Inc. to buy a 12 percent stake in Rio Tinto plc at US$ 14 billion. The deal was the largest overseas acquisition made by a Chinese company and left Chinalco as the largest shareholder of the Australian miner.

Rio Tinto Deal

Rio Tinto said earlier it was negotiating with Chinalco the sale of convertible debt and equity to the Chinese partner, with the aim of reducing its US$ 38.9 billion debt. The deal may top 20 billion yuan.

On February 10, Rio Tinto's designate-chairman Jim Leng announced resignation, less than a month after he was appointed to the position. Although Rio Tinto didn't disclose the reason of Leng's departure, it is widely believed that it was triggered by Leng’s objections to the plan to sell more shares to Chinalco.

Leng's exit may push Rio Tinto to reach an internal agreement over the deal with Chinalco. An announcement is expected by February 11.

Meanwhile, a company source told Caijing that Chinalco is looking to seat some of their board members at Rio after the capital injection.

But a major obstacle remain: approval from the Australian government. In August 2008, Australian Treasurer Wayne Swan approved Chinalco to hold up to 14.99 percent stake in Rio Tinto plc, with the stipulation that Chinalco will not increase its stake without a government permit, and that it won’t send board member to Rio Tinto before its stake exceeds 15 percent.