MINING giant Rio Tinto is in talks to raise up to 9 billion US dollars (£6.17 billion) from the Chinese government, it was reported today.
The deal with Chinalco, the state-owned aluminium company, could be one of China’s biggest overseas investments outside of the financial sector.
Rio’s debt levels have caused concerns among investors in recent months and it is hoped the capital injection from Chinalco could address those issues.
Reports said the plan would be for the Chinese firm to buy minority stakes in some of Rio’s most valuable mining assets.
It is also thought to be in discussions to up its shareholding in Rio, from 11% to 15%, potentially through a share placing which could raise around 1 billion dollars (£685 million).
Last week rival Xstrata announced a £4.1 billion rights issue in a bid to shore up its balance sheet.
Miners across the board are facing a sharp fall in commodity prices as the cost of crude remains around 40 dollars a barrel.
Last November BHP Billiton abandoned an offer for Rio because of deteriorating economic conditions.
Soon after, Rio said it planned to axe 14,000 jobs.