Miner Rio Tinto Scraps Chinalco Deal

To raise money, Rio will offer current shareholders the opportunity to buy new stock at a discount.

Investors will be offered 21 new shares for every 40 they hold at 28.29 Australian dollars ($22.71) each, the company said in a statement posted on the Australian stock exchange. U.K. shareholders will be offered shares at 1,400 pence each.

In Sydney trading, Rio shares jumped AU$5.59, or 8.4 percent, to close at AU$72.49 Friday. In London, its shares closed up 281 pence, or 10.3 percent, at 3,001 pence.

The company said the share deal would reduce the company's overall debt, allowing it to meet repayment obligations.

Rio Tinto turned to Chinalco — whose full name is Aluminum Corp. of China — in February to help repair a balance sheet weighed down by $38.7 billion in debt. A payment of $8.9 billion was due in October.

Under the now-scrapped deal, Chinalco would have invested $12.3 billion in joint investments in aluminum, copper and ore mining with Rio Tinto, and spent $7.2 billion on convertible bonds in the company. If redeemed for shares, the bonds would have almost doubled Chinalco's existing 9.3 percent stake in Rio Tinto Group to 18 percent.