Rio Tinto Scraps $19.5B Chinalco Deal

By Kristen Gelineau

SYDNEY -- Anglo-Australian miner Rio Tinto (RTP Quote) scrapped its $19.5 billion deal with Chinese firm Chinalco, choosing instead to raise $15.2 billion in a share sale and setting up a joint production venture with rival BHP Billiton(BHP Quote).

Rio Tinto Chairman Jan du Plessis said in a letter to shareholders the planned deal with Chinalco was now dead and his company would pay it a $195 million break fee, thus ending what would have been China's biggest overseas investment to date.

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