Alcoa Takes Stake in Rio Tinto

Shares of London-based Rio Tinto (RTP Quote) were rallying 7% on news that aluminum giant Alcoa(AA Quote) and the Aluminum Corp. of China (ACH Quote) would together buy a 12% stake in the company.

"This unsolicited development, of which we had no prior notice, reinforces our view of the long-term value of Rio Tinto," says Rio Tinto Chairman Paul Skinner.

Alcoa said it will contribute up to $1.2 billion to the roughly $14 billion total investment.

The surprise move may throw a roadblock in the attempts by Australia's BHP (BHP Quote) to follow through on its bid for Rio Tinto, made last November.

The mining patch has seen a flurry of merger activity over the past few years with Freeport-McMoRan Copper & Gold (FCX Quote) purchasing Phelps Dodge, Companhia Vale do Rio Doce(RIO Quote) gobbling up Inco and Rio Tinto buying Alcan.

Shares of BHP were rallying about 8%, while those of CVRD were ahead by 4.5%. Alcoa was adding 1%, and Aluminum Corp. of China was up 11%.