Source: Mineweb.com                    Date: 09 July, 2010

Rio Tinto's biggest shareholder, China's Chinalco, is considering buying a stake in the Oyu Tolgoi project, according to a regulatory filing. Oyu Tolgoi is billed as one of the world's biggest undeveloped mine deposits and is expected to cost USD4.6 billion to build.  Rio said it was interested in converting its stake in partner Ivanhoe Mines, which discovered the deposit, into direct ownership of the mine project, Ivanhoe reported in a filing to the U.S. Securities and Exchange Commission.

"Chinalco has indicated an interest in acquiring a minority equity stake in the company or acquiring, from the company, a direct minority ownership interest in the OT project," Ivanhoe said in the filing. "Rio Tinto's ongoing discussions with Aluminum Corporation of China (Chinalco) also continue."

Rio is in charge of building and operating the mine but its holding in the deposit is indirect, through Ivanhoe. Rio has been holding talks with Ivanhoe about "the potential conversion of its ... equity stake in the company into a direct ownership interest” in the project, the filing said. The end result of talks could be a two-way or three-way agreement between Ivanhoe, Rio and Chinalco, it added.

On June 29, Rio paid USD393 million to exercise warrants and increase its stake in Ivanhoe to 29.6 percent. Rio has also discussed the mine project with the European Bank for Reconstruction and Development and the International Finance Corp, the finance arm of the World Bank, the filing said.