Rio deal takes another turn as Chinalco reviews its options

Rio Tinto's tempestuous tie-up with Chinalco took another turn yesterday as the dual-listed miner's Australian shareholders called for changes to the controversial deal and sources claimed the Chinese group was close to a new plan.

As Rio chairman Jan du Plessis canvasses the views of UK shareholders this week, before jetting off to talk to their Australian counterparts, the Chinese aluminium giant is believed to be mulling over revisions to the proposed $19.5bn (£12.4bn) deal structure to mollify the Australian foreign investment regulator and shore up dicey investor support.

Chinalco is reportedly considering plans limiting its stake to 15 per cent, rather than the original 18 per cent. Local press in Australia also claim that Chinalco could ditch clauses giving it a role in setting prices and a right to 30 per cent of Rio's iron ore. Both companies have repeated refused to comment and reiterated their commitment to the deal.

But Rio watchers picked up a less bullish tone from Tom Albanese, the Rio chief executive, at last week's Barcelona mining conference, sparking another round of rumours.

A spokesman for the company said yesterday: "The chairman is not going to shareholders with proposals, he is listening to them and finding out what their views are. Mr Du Plessis has said in the past that he does not want to put something to shareholders that they are not going to accept, but at this stage that is all. Chinalco remains very much the focus of what Rio Tinto is doing."

Shareholders' concerns span a wide spectrum, on both sides of the globe. Some would prefer a rights issue without the dilutive effect of the Chinalco proposal; some favour a deal whereby the Chinese group does not buy into key assets such as the Pilbara iron ore mine; some propose a tie-up with former suitor BHP Billiton. The BHP option has gained traction in recent weeks, boosted by analyst speculation on scenarios including a takeover bid and the underwriting of a rights issue.

BHP walked away from its hostile takeover bid last November, spooked by Rio's $40bn debt mountain. A number of major UK shareholders indicated last week that their preference was for a BHP deal. "As a minimum the existing Chinalco terms would have to be approved," one major investor said.