Source: The Financial Times                           Date: 06 April, 2011

Chinalco, the Chinese aluminum group, has no plans to sell down its shares in Rio Tinto, viewing the mining house as a key strategic partner as Chinalco expands overseas. “We can’t go out to fight alone,” said Chinalco chairman Xiong Weiping, explaining that co-operation with global miners was essential for overseas development. “With Rio being one of the top mining companies in the world, Chinalco can learn a lot from them, including in operational management, asset operation and risk management.”

His remarks on strategic co-operation underline the challenges that Chinese miners face as their expansion plans run into political opposition in resource-rich countries such as Australia. Chinalco has seen its own share of disappointments there, including a failed USD19.5-billion investment in Rio in 2009. Chinalco is Rio Tinto’s largest shareholder, controlling nine per cent of the global miner, in a symbiotic relationship that has also seen the two companies sign joint ventures for projects in Guinea and in China.

Speculation has long centered on whether Chinalco might sell down its stake, acquired in a dawn raid during the contested USD147-billion bid for Rio launched by BHP Billiton, which ultimately failed. Mr. Xiong said that “at present, we do not plan to increase or decrease our shares.” He added, “Through our purchases of Rio stock, we developed a deep understanding of Australian law, Australia’s stance and attitude towards its own resources, and Australian public opinion.”

Mr. Xiong said he was hunting for high-grade copper, bauxite, iron ore and coal resources, the minerals that China needs to fuel its urbanization. “Our target areas are mainly countries next to China, for example south-east Asia, Mongolia and Central Asia.” He also confirmed that Chinalco was keenly interested in Oyu Tolgoi, a copper and gold deposit in Mongolia that is being developed by Rio Tinto and Ivanhoe. “We hope to contribute Chinalco’s expertise to the development and construction of this project because it is right on our border,” he said, mentioning processing and distribution in particular. The Chinese miner is also in discussions with a Mongolian state-owned company about potential resources projects.