Multinational resource company Rio Tinto is forming a strategic alliance with Chinese aluminum and copper producer Chinalco which will provide the company with US$19.5bn in cash through convertible bonds and JVs, Rio Tinto said in a statement.
With the transaction, Rio Tinto said it will be able to pay off US$10bn of its net debt this year and will benefit from US$12.3bn in JV investments by Chinalco in aluminum, copper and iron ore.
Along with the deal Rio Tinto aims to raise US$7.2bn through convertible bonds in two separate tranches, Business News Americas reported.
Rio Tinto saw its 2008 net income cut in half to US$3.68bn compared to the year before. In its yearly results report, the company said it is mainly focused on paying off debt at present.
On an operational level, the company said it does not plan to make changes to its main asset in Latin America, a 30% stake in Chile's Escondida, the world's largest copper mine.
"With respect to the Chinalco announcement, we do not expect it to have any implications at Escondida, other than that Chinalco is buying 49.75% of our 30%. [Chinalco] will be an additional party at Escondida," Rio Tinto spokesperson for the US and South America, Tony Schaffer, told BNamericas.
After recently selling its iron ore and potash assets in South America to Brazilian giant Vale (NYSE: RIO) for US$1.6bn, Rio Tinto's only other main property on the continent is the La Granja copper project in Peru, which is on hold pending the improvement of market conditions. (Andina)
With the transaction, Rio Tinto said it will be able to pay off US$10bn of its net debt this year and will benefit from US$12.3bn in JV investments by Chinalco in aluminum, copper and iron ore.
Along with the deal Rio Tinto aims to raise US$7.2bn through convertible bonds in two separate tranches, Business News Americas reported.
Rio Tinto saw its 2008 net income cut in half to US$3.68bn compared to the year before. In its yearly results report, the company said it is mainly focused on paying off debt at present.
On an operational level, the company said it does not plan to make changes to its main asset in Latin America, a 30% stake in Chile's Escondida, the world's largest copper mine.
"With respect to the Chinalco announcement, we do not expect it to have any implications at Escondida, other than that Chinalco is buying 49.75% of our 30%. [Chinalco] will be an additional party at Escondida," Rio Tinto spokesperson for the US and South America, Tony Schaffer, told BNamericas.
After recently selling its iron ore and potash assets in South America to Brazilian giant Vale (NYSE: RIO) for US$1.6bn, Rio Tinto's only other main property on the continent is the La Granja copper project in Peru, which is on hold pending the improvement of market conditions. (Andina)
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chinalco, rio, tinto, form, strategic, alliance, worth, us, 19, 5bn
