Rio still in talks with Chinalco

(China Daily)
Updated: 2009-08-22 08:29

Rio Tinto Group is seeking a better relationship with China, the mining company's largest customer, and is in talks with Aluminum Corp of China (Chinalco) after four Rio employees were arrested in a spying row.

Chief Executive Officer Tom Albanese said he's "disappointed" Rio didn't complete a proposed investment by Chinalco in June. He's held "early stage" talks with the company and Chinese officials about cooperation and possible joint investments, he said on Thursday in an interview on Bloomberg Radio.

"Those relationships are very important. Certainly from a Chinalco perspective, in the long term I think there are things we can do together," Albanese said. "We have a number of challenges in China at the moment."

Albanese has grappled with borrowings that ballooned after London-based Rio's $38.1-billion purchase of Canadian aluminum producer Alcan Inc in 2007. He rejected Chinalco's proposed $19.5-billion deal in June, instead selling shares and agreeing to a joint venture with rival BHP Billiton Ltd to help pay debt. A month later, four Rio iron ore executives were detained in Shanghai. They face charges of bribery and stealing commercial secrets from China's steel industry.

Rio is "pleased" the charges against Stern Hu, an Australian and head of its iron ore business in China, and the three other executives weren't as serious as first thought and that the four have legal teams in place, Albanese said.

"Things have moved in the last few weeks, and they've moved in a positive direction," Albanese told reporters in London.

Rio is still seeking a price settlement for annual iron-ore supply contracts with Chinese steel mills.

Negotiations have stalled as the China Iron & Steel Association has been demanding a cut from last year's record price that's steeper than the 33-percent agreed on by Japanese and Korean customers.

Rio is shipping iron ore to China on long-term contracts with so-called provisional pricing terms based on the 33-percent cut, Albanese said in a conference call.