Rio considering amendment to Chinalco deal: Reports

Rio is believed to be considering a compromise scenario to limit Chinalco's purchase of convertible bonds to a 15 per cent stake in Rio instead of the 18 per cent under the current deal.

This would offer around 3 to 4 per cent of share capital valued at around $US3 billion to shareholders. The amended option is strongly believed to be a live option according to reports from London over the weekend.

The move will serve to placate shareholders who are angry because they have been denied the right to participate in a capital raising and also go down well with the Rudd government.

Meanwhile Chinalco has denied any knowledge of changes being planned to the deal.

However, Chinalco is said to be amenable to changes in the structure of the bond issue to get the deal through but is not prepared to compromise on the 15-50 per cent stake it agreed to buy in Rio's premium iron ore, aluminium and copper assets.

Chinese state-owned aluminium giant Chinalco had agreed to pick up $US7.2 billion worth of convertible bonds to boost its stake in Rio from 9 per cent to 18 per cent to get Rio out of its debt mire.