Rio Tinto and Chinalco in fresh talks

24th Aug 2009 08:44

Mining giant Rio Tinto is reportedly in talks with the Aluminium Corporation of China (Chinalco) over co-operation in bauxite and alumina production.The Australian Financial Review newspaper quoted Rio Tinto’s chief financial officer Guy Elliott as saying the talks are at a very early stage.The development indicates a thaw in relations between the two companies after Rio Tinto controversially bowed to shareholder pressure earlier this year and pulled out of a deal with Chinalco that would have seen the Chinese state-owned company pump $19.5bn into Rio in return for a chunky equity stake.Had Rio proceeded with the cash for shares deal, Chinalco’s shareholding in the Anglo-Australian miner would have risen to around 18%.Relations between the two companies are thought to have been tense since the collapse of the deal, with some observers suggesting that China’s detention of four Rio Tinto employees in July on suspicion of stealing state secrets was a signal from the Chinese authorities that it was displeased with Rio spurning a closer tie-up with Chinalco.Rio Tinto and Chinalco have bauxite deposits located side by side in Queensland, Australia.