Rio Tinto cleared over Chinalco deal

15th Mar 2010 07:10

Rio Tinto has been cleared of wrong doing over the collapse of its proposed tie-up with aluminium group Chinalco by an internal Chinese investigation, which instead blamed naivety, poor PR and soaring metal prices for its breakdown.Chinalco's plan to by 18% of Rio Tinto fell apart because commodity prices soared, a failure of the public relations campaign and the perception that Chinalco was a state-run company, the report concluded.Rio Tinto subsequently merged its Western Australia iron ore businesses with those its rival BHP Billiton, a move that infuriated the Chinese.Four Rio Tinto employees were arrested soon after and still remain in prison charged with industrial espionage and bribery. The arrests last year sparked a diplomatic row with Australia with tensions still simmering over the arrests. Stren Hu, one of those arrested, is an Australian citizen.The Chinese report comes as the latest round of negotiations over prices for iron ore get into full swing. China is one of the main buyers of iron ore and Australia a key supplier.Australia's Trade Minister said yesterday the country would not intervene in the annual run of iron ore price negotiations between Rio and BHP and Chinese buyers.