Rio Tinto close to agreement on GBP6bn Chinese cash injection.

(From Guardian Unlimited)

Rio Tinto was believed to be close tonight to securing a GBP6bn investment from state-owned Chinese aluminium producer Chinalco to help to ease its debt.

Confirmation that talks are being held with the aluminium company could come tomorrow and are part of an urgent refinancing promised by Rio's chief executive, Tom Albanese. The mining company has been saddled with debt since taking over Alcan as the credit crunch began in mid-2007.

Albanese has turned to the Chinese producer, which owns 9% of Rio after an audacious dawn raid a year ago, with a view to selling it more shares or bonds and possibly stakes in mines to try to cut debt by $10bn (GBP7bn) by the end of this year.

If a deal can be agreed, it would represent a substantial investment by the Chinese government and further reflect the shift in power between recession-struck developed countries and faster-growing Asian economies. Beijing has been aggressively building stakes in energy and natural resources companies to feed its rapidly growing economy.

Rio, with a listing in London and Sydney, will have to tread carefully to ensure shareholders do not feel their stock is being unfairly diluted if it issues more shares to Chinalco. Pre-emption rights have been a point of issue in recent weeks. Barclays was punished by investors for inviting Middle Eastern governments to buy new shares and Rio's rival Xstrata is embroiled in a row over its fundraising deal with its largest investor, Glencore.

Chinalco's stake in Rio would rise ...