Chinalco-Rio Update

Rio Tinto has confirmed that the $19.5 billion Chinalco investment is off and that it will instead raise $15.2 billion through a rights issue (see “Chinalco’s Rio Deal On Verge Of Collapse“). Chinalco’s president Xiong Weiping said in a brief statement that the company is “very disappointed”. It is not clear what Chinalco’s next steps will be to secure raw material supplies around the world, or whether the rebuff to what would have been the largest Chinese foreign investment will deter other Chinese enterprise from investing overseas. “Chinalco will continue to explore opportunities to advance its strategic objectives and in the meantime will monitor developments at Rio Tinto as the company’s current largest single shareholder,” Xiong said in his statement. Which isn’t saying much at all.