Rio Tinto’s chief strategy officer, Doug Ritchie, says he is confident Chinalco’s proposed $19.5 billion capital injection will pass muster with the Australian regulators. The country’s Foreign Investment Review Board is seen as a key hurdle for the deal to clear, given the misgivings it has previously expressed about the state-owned aluminum company’s potential sway over Australia’s natural resources.
Speaking on TV, Ritchie said the deal had been structured to meet Canberra’s concerns. The Chinalco investment is split $12.3 billion in joint venture stakes in nine Rio businesses and $7.2 billion of convertible debt.
The later part may just have squeaked under the wire as the FIRB is seeking to amend its rules so convertible debt counts as equity when considering a foreign ownership stake.
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