It was a deal Rio Tinto had been resisting for months. But in the end, every other option must have seemed worse. Rio is buried under a huge debt burden after heavy investment in capacity during the suddenly vanished commodity boom, and its purchase of Alcan in 2007. With the financial markets all but closed, the mining giant was up against the wall.rnFor China, flush with cash and looking for guaranteed sources of commodities to feed its factories and mills, it was an opportunity that had as much to do with geopolitical strategy as financial investment. On February 12th the Aluminum Corporation of China (Chinalco), a state-owned enterprise, announced that it would invest $19.5 billion in Rio, in two tranches. Chinalco will pay $12.3 billion for stakes of up to 50% in nine of Rio's mining assets, and will also buy $7.2 billion of bonds convertible into shares, in effect giving it the right to own just under 20% of Rio.rnThe total, coincidently or not, is sufficient to pay off debts maturing over the next two years-a period that Rio's chief executive, Tom Albanese, warned would probably be "difficult", which was putting it mildly. Chinalco said its investment would be financed by Chinese financial institutions, adding that therernhad already been various discussions-which suggests that the government has already granted its approval.
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