Rio Considering Asset Swap to Restructure Chinalco Stake

Mining giant Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO,OTC:RTPPF) is considering an asset-for-equity swap to cut Chinalco’s stake in the company, according to local media reports.

The companies penned a deal in 2008, under which state-owned Chinalco would hold 15 percent interest in Rio. According to Reuters, Rio is now aiming to cut this to 11 percent to simplify its ownership structure and possibly pursue new partnerships.

In late August, new Rio CEO Simon Trott said that he intends to restructure the company and focus on three main units: iron ore, copper, and aluminum/lithium.

Reports suggest the proposed asset swap with Chinalco could involve the Simandou iron ore project in Guinea — a 75 percent Chinese state–owned asset that Chinalco previously attempted to acquire from Rio Tinto in 2016.

The Oyu Tolgoi copper mine in Mongolia, which is expected to produce 500,000 tonnes of copper per annum, was also mentioned.

A trial of battery swap electric haul truck technology was launched at Oyu Tolgoi on Monday (October 27), in partnership with China’s State Power Investment Corporation (SPIC) Qiyuan.

“The launch of this trial with SPIC Qiyuan is an important milestone, harnessing China’s widely used and leading battery swap technology in a partnership that supports Rio Tinto’s drive to accelerate low-carbon innovation,” commented General Manager Global Equipment and Diesel Transition Ben Woffenden.

“The rapid deployment and fast-tracked operational learnings have highlighted the importance of partnerships in advancing low-emission haulage alternatives for our business.”

Both Rio Tinto and Chinalco have not made statements regarding the proposed asset-for-equity swap.

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Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.