Rio Tinto Considers Major Asset Swap with Chinalco to Break Governance Deadlock

Global mining giant Rio Tinto is considering a complex deal to resolve management problems. Sources say the company is looking at an asset-for-equity swap with its key shareholder, Chinalco. Chinalco is a major state-owned Chinese aluminum producer.

The core issue is a long-running governance gridlock. This gridlock has made major strategic decisions difficult. Rio Tinto hopes this unique transaction will streamline their relationship. The proposed swap would see Rio Tinto trade some mining assets. In return, Chinalco would reduce its ownership stake in Rio Tinto.

This move aims to reduce Chinalco’s influence on the board. This would allow Rio Tinto’s management to move faster. The structure of the deal is highly complex. It involves valuing both the assets and the equity correctly.

The ultimate goal is to simplify Rio Tinto’s corporate structure. If successful, the deal could boost investor confidence. It would remove a major point of friction between the two giants.