Chinalco president Xiao Yaqing said on Friday his firm had no plans to increase its minority stake in miner Rio Tinto, the Financial Times reported.
The Chinese state-owned aluminium group agreed to invest $19.5 billion in Rio Tinto on Thursday in a deal to secure resource supplies for China and help cut Rio’s heavy debt. The move sent Rio’s share price tumbling.
“Depending on the market, we will look at converting our convertible bonds into equity. But we have no plans for increasing our stake beyond that,” Xiao told the FT. “We view this from the angle of creating financial returns.”
Xiao also rejected the suggestion that Chinalco’s investment was a political as well as a business move, since it could boost China’s overall global influence.
“The market and the price-setting mechanism for iron ore is extremely transparent and there is no way that Chinese companies would gain an advantage in that respect through this deal,” he said. “Other companies have joint ventures with Rio Tinto as well, so they have just as much influence.”
Chinalco planned to set up a joint venture with Rio Tinto for exploration in China, Xiao said, but added that the two firms had yet to agree on the terms and the scope of the venture. “Our entry will greatly advance Rio Tinto’s efforts for exploration in China,” he said.
Asked about the sharp fall in Rio Tinto’s share price, Xiao said he was sure it would soon reverse. “I am convinced that the share price will rise a lot from where we are now.” (Reuters)