Rio and Chinalco mulling changes to deal

26th May 2009 14:05

Sam Walsh, the head of Rio Tinto's iron ore division, has hinted that the company's controversial cash injection deal with Chinalco may yet be revised. Addressing reporters at a mineral conference in Canberra, Australia, Walsh said the group would make its mind up on the $19.5bn share stake sale to Chinese state-owned aluminium producer Chinalco after it had taken soundings from investors and the Australian authorities.Major shareholders in Rio Tinto are said to be still unhappy over the deal, especially as commodity prices have recovered strongly in recent months. 'We have certainly seen economic conditions improve since the deal was announced in February,' Walsh said, adding that the situation with Chinalco is evolving.Authorities in Australia are also said to be concerned over the power over pricing the deal could give Chinalco, though Walsh appeared to discount this threat, saying there is no intention for Chinalco, which will be given two seats on the board if the deal goes through, to be involved in pricing. 'We set iron price at a product group level, not an asset level and certainly not at a board level,' 'In the resource industry there is a solid history of customer involvement in projects and that has not impacted on pricing,' Walsh continued. 'It beggars belief that anybody can now object to this in 2009, on the basis of some principle entirely new to this industry.'