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UPDATE 2-Chalco Shares Suspended Amid Rio Tinto Tie-up Talk
Jul 29,2010 08:52CST
industry news

HONG KONG/BEIJING, July 29 -- Shares of Aluminum Corp of China Ltd (Chalco) (2600.HK: Quote) were halted on Wednesday, as its state-run parent said it would hold a signing ceremony on Thursday likely to be attended by Rio Tinto (RIO.AX: Quote) RIO.L executives.

Chalco (601600.SS: Quote) shares stopped trading in both Shanghai and Hong Kong as the company said it was "discussing important issues", according to announcements in both markets.

The company said its shares would resume trading on Friday, as Chalco's state-run parent, Aluminum Corp of China, also known as Chinalco, sent out invitations for a signing ceremony on Thursday in Beijing.

That invitation included the names of both Chinalco and global mining giant Rio Tinto in the security code on the back.

Spokesmen from both Chinalco and Rio Tinto both declined to comment on the matter.

Chinalco, which holds a stake of around 9 percent in Rio, signed a non-binding $2.9 billion pact with the global miner in March to jointly develop an iron ore mine in Simandou in Guinea.

Under that deal, Chinalco was due to pay Rio $1.35 billion over two years to take up its 44.65 percent stake.

Chinalco may be preparing to hand over its interest in the Simandou venture to its publicly-listed unit to diversify Chalco's asset base, said Heng Kun, chief equities analyst at Essence Securities.

"Chinalco faces profit declines from its aluminium business. If the firm only relies on aluminium business, it may see a loss this year and the market shares may decline," Heng said.

"If the firm puts some assets that have good prospects into the listed firm, such as iron ore and copper, that would increase investors' confidence in Chalco."

Heng said such a move, if it materialised, could mark the beginning of other such moves that would see Chalco operating its parent company's other assets and aluminium businesses in the future.

Chinalco has been diversifying out of aluminium, and has a right to develop a copper mine in Peru.


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