Chinese aluminium giant Chinalco confirmed Tuesday it was in talks with Rio Tinto over increasing its stake in the global mining company but denied a deal had been reached, state media reported.
On Monday, the Anglo-Australian giant — which is trying to reduce its massive debts — said it had held talks with the state-owned Chinese firm about "acquiring minority interests in various operating businesses" of the group.
Rio said in a statement that Chinalco was also interested in possibly "investing in convertible instruments".
Chinalco vice-president Lu Youqing was quoted Tuesday by state-run Xinhua news agency as confirming the two companies had been in talks, but saying no deal has been reached.
"There is no certainty of an agreement with Rio because it is also talking to other people," Lu said, according to Xinhua.
Rio Tinto plans to pay down 10 billion US dollars of its 38.9 billion dollar debt from the purchase of aluminium producer Alcan in 2007 and has said it is considering a range of options, including a possible equity issue.
The company has already announced that it will slash 2009 capital spending by 5.0 billion US dollars and cut 14,000 jobs.
Rio was thought to be close to selling Chinalco an 8.0 billion US dollar stake in key assets that could give the company a foothold in Australia's iron ore, coal and aluminium reserves, The Australian newspaper said Monday.
Rio is reportedly looking at a 15 billion dollar combination of asset sales, convertible notes and share issues that would increase Chinalco's stake in the world's third largest miner, the newspaper said.
Chinalco, acting with US-based Alcoa Inc, bought 12 percent of Rio Tinto's London-listed shares for 14 billion US dollars last year. The transaction gave Chinalco and Alcoa an overall nine percent stake in the group, which is also listed in Australia.
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