Shares in Rio Tinto plunged nine percent in Australia following increased opposition to the $19.5 billion deal with Chinese metals group Chinalco.
By Ian Armitage
Shares closed at $47.50 as critics of the deal stirred up opposition and the Senate announced it would examine foreign investment.
Chinalco plans to pay $12.3 billion for stakes in Rio’s iron ore, copper and aluminium assets and $7.2 billion for convertible notes that would double its equity stake in Rio to 18 percent.
The deal is aimed at helping to ease its $39 billion debt mountain.
FOREIGN CONTROL
However, the Australian government is arguing that the foreign control of natural resources poses a real threat. An inquiry into the proposed deal will solicit public comment, call witnesses and make non-binding recommendations by June 17, when the government can act on the findings or ignore them.
Australia’s Foreign Investment Review Board, which is considering the Chinalco deal, is working to a deadline of June 15, and will make recommendations to Treasurer Wayne Swan, who will have the final say.
Jan du Plessis, Chairman of British American Tobacco, was appointed as Chairman of Rio Tinto on March 17. He will now be responsible for selling the controversial agreement to investors.