Rio Tinto Kills China Deal (Update)

Updated from June 4

The debt-ridden Aussie mining giant Rio Tinto(RTP Quote) made official Thursday night its decision to scuttle a contentious deal with the Chinese aluminum concern, Chinalco.

Under an agreement signed in February, the Chinese government-owned Chinalco was to infuse $19.5 billion into Rio Tinto, which was struggling to pay down $19 billion in debt over the next year and a half. An $8.9 billion payment is due in October.

But Rio was able to cobble together a more attractive replacement for the scrapped Chinalco alliance, investors seemed to say Friday, when they pushed Rio's Australia-listed shares up by more than 8%. In New York, its American Depositary Receipts were trading at $195.96, up 7%. Rio shares had dropped sharply on Thursday when word emerged that it would likely move away from Chinalco, but details of the new rights offering appeared to appease investors. ...