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Chinalco and Alcoa spoil BHP designs on Rio Tinto Group

Aluminum Corp of China (中國鋁業) and Alcoa Inc bought a £7.2 billion (US$14 billion) stake in Rio Tinto Group, hindering BHP Billiton Ltd's plan to acquire the world's third-largest mining company.

Chinalco, as the state-owned company is known, and Alcoa don't intend to make an offer for Rio after buying the 12 percent stake on the market, the companies said yesterday in a statement. Chinalco is China's largest aluminum maker and Alcoa is the third-biggest maker of the lightweight metal in the world.

Chinalco and Alcoa want to block a combination of BHP and Rio Tinto that would be the biggest supplier of aluminum and coal and control a third of the global iron ore market.

"It's clearly a spoiling move," said Tim Barker, who helps manage and advise on US$54 billion in assets including BHP and Rio at BT Financial Group in Sydney. "Where you've a blocking stake like that it would be difficult to win some aggrieved shareholders unless they thought they were getting the right deal."

The two companies bought the shares in London at £60 a share, Lehman Brothers Holdings Inc said in a statement.

BHP's three-for-one share offer for Rio was rejected in November.

Melbourne-based BHP, the world's largest mining company, has until Wednesday to make a formal bid for Rio Tinto or shelve it for six months.
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