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Four Chinese banks to lend Chinalco $21b to fund Rio Tinto deal

(Xinhua)
Updated: 2009-03-28 10:22

Four Chinese banks, including Bank of China (BOC), have signed agreements to provide $21 billion worth syndicated loans to the Aluminum Corporation of China (Chinalco), to support its bid for Rio Tinto, BOC announced Friday.

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The agreement will not take effect until the deal is approved by the Australian government, BOC's spokesman Wang Zhaowen said.

"BOC approved the loan agreement after strict assessments according to commercial loan regulations, and would work together with another three banks to fund the bid," he said.

"It reflects Chinese banks are confident in Chinalco and its strategic partnership with Rio Tinto, as well as the long-term prospect of the mining industry," he said.

But he did not clarify which the other three banks were.

The Caijing magazine earlier reported the other lenders were the State-run Agricultural Bank of China, and two policy lenders -- China Development Bank and Export-Import Bank of China.

In January 2008, Chinalco and US-based aluminum producer Alcoa jointly bought a 12-percent stake in London-listed Rio Tinto PLC for $14 billion. The deal translated into a 9.3-percent stake in the parent company Rio Tinto by Chinalco, which made it the top shareholder of Rio.

Chinalco announced later on February 12 that it would invest $19.5 billion to bail out Rio Tinto, the world third largest miner. This is by far the largest overseas investment by a Chinese company.