Red dawn

1 Feb 2008 By John Foley Follow @johnsfoley

Chinalco s audacious move, in tandem with US miner Alcoa, gives it a 9% stake in the UK miner. It s not enough to skewer rival BHP s bid yet. But it dramatically changes the rules of the game. The $270bn tieup now has a Chinese kingmaker.

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Chinalco, a stateowned Chinese miner, has teamed up with US miner Alcoa to build a 12% stake in Rio Tinto's UKlisted shares, equivalent to 9% of its total economic value. The stake, worth around $14bn, was bought at £60 a share, according to people familiar with the situation a 20% premium to the closing price on Thursday.

Shining Prospect, the vehicle through which Chinalco and Alcoa have invested, said it had no intention of making a full bid for Rio, but reserved the right to do so under certain circumstances. One would be a formal offer for Rio from BHP Billiton, the rival miner that made an allshare approach to Rio last November.

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