Rio Tinto, Chinalco in Talks Over Asset for Equity Swap

MELBOURNE Rio Tinto Group (ASX: RIO) is reportedly in discussions with China’s state-owned Chinalco over an asset-for-equity swap that could reduce the Chinese company’s stake in the world’s second-largest miner to around 11%, according to media reports citing sources familiar with the matter.

Under the proposed arrangement, Chinalco would exchange part of its shareholding in Rio Tinto for interests in some of the miner’s key assets. Such a move could give Rio greater flexibility to resume share buybacks and pursue new strategic partnerships that have long been constrained by its complex dual-listed ownership structure.

Neither Rio Tinto nor Chinalco has commented publicly on the reported talks.

Chinalco first acquired nearly 15% of Rio Tinto Plc, the London-listed arm of the dual-listed Anglo-Australian mining giant, in 2008. That investment was made under strict conditions imposed by the Australian government, including a prohibition on raising its stake without regulatory approval and a ban on board representation.

The partnership drew scrutiny a year later when Chinalco proposed a US$19.5 billion bailout of debt-laden Rio, which was then struggling with about US$39 billion in liabilities. The deal ultimately fell through after opposition from regulators and shareholders wary of Chinese influence over strategic mining assets.

Simandou, Oyu Tolgoi in Focus

The potential asset swap could help resolve long-standing governance challenges and simplify Rio’s ownership structure. Among the projects that may be included in the talks are the company’s massive Simandou iron ore deposit in Guinea, 75% of which is controlled by Chinese interests, and the Oyu Tolgoi copper mine in Mongolia, one of Rio’s largest growth assets.

Another possibility under review is Rio’s titanium business, part of a broader restructuring drive launched by new chief executive Simon Trott. Trott, who took the helm in August after leading Rio’s iron ore division, is overhauling the company’s structure to focus on three core business units: iron ore, copper, and aluminum, lithium, as part of efforts to streamline operations and improve returns.

Investor Pressure on Dual Listing

The reported negotiations come amid renewed pressure from activist investors urging Rio Tinto to abandon its dual Anglo-Australian listing, arguing that the arrangement adds governance friction and complicates deals in jurisdictions sensitive to Chinese investment.

If finalized, the proposed Chinalco transaction could mark a significant step toward simplifying Rio’s ownership framework and strengthening its capacity to pursue strategic projects across its global portfolio.