Giant mining company Rio Tinto
Chinalco, along with Alcoa
It appears that, should the latest Rio Tinto-Chinalco deal transpire, it would involve Chinalco paying about $7.2 billion in bonds that would convert into Rio Tinto shares, roughly doubling Chinalco's stake in the company. The remaining $12.3 billion would take the form of minority investments in Rio's iron-ore, copper, and aluminum assets.
Indeed, it appears that one of the crown jewels of the proposal would involve Chinalco purchasing 25% of Rio Tinto's Kennecott copper mine in Utah. And beyond the cash and asset aspects of the transaction, Chinalco apparently would receive two seats on Rio Tinto's board.
But thus far, the deal is far from a certainty. Rio Tinto -- which on Thursday reported a 50% slide in 2008 earnings to $3.7 billion -- must gain prior approval from various regulatory authorities as well as its own shareholders.
And then there's BHP, which along with Rio Tinto and Brazil's Vale
So this set of circumstances could become progressively more interesting and fun to watch. For my money, all of the companies mentioned above likely will return to the ranks of the potentially sound investments once the global economy begins to regain its sea legs. For that reason alone, I'd advise my Foolish friends to keep the sector prominently displayed on their watch lists.
Rio Tinto is a four-star company among Motley Fool CAPS players. Why not add your vote to the rating?
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