SYDNEY: China's state-owned Chinalco is likely to participate in global miner Rio Tinto Ltd's $15.2 billion rights offer, a source briefed on the matter told Reuters on Wednesday, in a sign that China was keen to retain its interest in the world's top iron ore miner.

Rio's rights issue, the fifth-biggest on record, closes on Wednesday and is seen generating strong demand on signs of a recovery in the global economy.

Chinalco's relations with Rio soured early last month after the indebted miner called off a bigger equity partnership that would have seen the Chinese group invest another $19.5 billion into dual-listed Rio Tinto.

A Chinalco spokesman based in Australia declined comment. Rio Tinto officials did not return phone messages seeking comment.

The source declined to be identified as the decision was not public yet.

The 21-for-40 rights issue is being priced at A$28.29 per Australian-listed share and 1,400 pence per London-listed share.

Chinalco, Rio's top shareholder, owns about 9 percent of the combined group and a full take-up of the rights would lead to an outlay of about 880 million pounds ($1.5 billion).

If Chinalco takes up its entitlement in full, that would bring down its average holding cost in Rio. Chinalco had bought its initial stake at 60 pounds ($99.69) per share in February 2008 in a raid on the London-listed stock.

Rio is raising money to reduce its $38 billion mountain of debt, which it accumulated when it bought Canadian aluminum group Alcan at the top of the commodities market in 2007.