Rio Tinto has entered into a strategic partnership with Chinalco.

Mining giant Rio Tinto has announced a partnership with the Aluminium Corporation of China, Chinalco, which will include joint ventures and convertible bonds worth US$19.5 billion (£13.6bn) and which is hoped to secure the positions of both companies.
 
Chinalco has invested $12.3bn in aluminium, copper and iron ore joint ventures, along with subordinated convertible bonds. Both organisations have commented on the benefits of the partnership, citing complementary skills, Chinalco’s strong relationships within China, and access to Rio Tinto’s assets.

Chinalco’s links within China are of particular importance to Rio Tinto, which hopes to enter into a landmark venture for exploration in the country – this partnership with Chinalco aims to facilitate Chinese institutional funding for the project.

Xiao Yaqing, President of Chinalco, commented on the partnership: “It allows Chinalco a significant role in a strong industry with excellent growth prospects and direct economic exposure to Rio Tinto’s leading aluminium, copper and iron ore assets. With the portfolio of these global assets, Chinalco will be better positioned to serve its customers in China and globally.”

Rio Tinto is one of the world’s leading mining groups. Headquartered in the UK, it has reported underlying earnings of $10.3bn – 38% above 2007 – and it anticipates the partnership will help to reduce its net debt by a further $10bn.

The news follows months of negotiations since Chinalco made its initial investment in Rio Tinto, acquiring a significant stake of the mining group in February 2008. Paul Skinner, Chairman of Rio Tinto, said: “We have long recognised and welcomed the growing participation of China in the global economy and the opportunities this presents to Rio Tinto. We believe this transaction is a logical step in advancing our capability in the Chinese market and the Boards of Rio Tinto recommend it to shareholders.”