- The Washington Times - Tuesday, March 17, 2009

LONDON (AP) - Mining company Rio Tinto PLC named a new chairman on Tuesday in its second attempt to install a successor to Paul Skinner, appointing Jan du Plessis as its planned $19.5 billion deal with Chinalco ran into heavy political winds in Australia.

The first candidate to replace the retiring Skinner at the world’s third biggest miner, Jim Leng, quit in February after less than a month after voicing opposition to the tie-up with Aluminum Corp. of China.

The Chinalco deal, if approved by regulators and shareholders, will aid dual-listed Rio Tinto’s quest to pay off about $10 billion of its $38 billion in debt by the end of 2009.

But Australian lawmakers have raised concerns about key assets falling into Chinese hands, while some investors complain that Chinalco, already a stakeholder in the company, is being favored over other investors.

Du Plessis, who will take over from Skinner at the end of the Anglo-Australian company’s annual general meeting on April 20, was quick to express his support for the deal.

“Our immediate focus must be on giving Rio Tinto the best possible platform to create shareholder value and to weather the tough and uncertain global economic conditions,” he said in the statement announcing his appointment.

“Pursuing the completion of the transaction with Chinalco will give Rio Tinto this platform, from which we will be even better placed to prosper when we see economic recovery,” he added.

Australia’s Foreign Investment Review Board has barred Chinalco from going ahead with the deal for 90 days while it conducts a review, with the final decision to be made by Australian Treasurer Wayne Swan.

In an attempt to whip up public reaction, senior opposition lawmaker Sen. Barnaby Joyce is appearing in two commercials warning of the potential dangers of sending Australia’s resource wealth overseas.

And the country’s Senate is due to vote Wednesday on whether to begin an inquiry into state-owned foreign companies buying critical national assets.

Rio Tinto’s share price dropped 7.5 percent to 1,943 pence on the London Stock Exchange on Wednesday.

The company argues that it needs the Chinalco deal to pay off debt and cope with the global economic crisis _ rival miner BHP Billiton cited the company’s debt as a major risk when it canceled a $68 billion takeover bid in November.

The company is axing some 14,000 jobs worldwide, selling assets and cutting capital spending to cope with a collapse in commodity prices triggered by the global credit crunch.

Chinalco has pledged $12.3 billion for stakes in joint ventures in aluminum, copper and ore mining with Rio Tinto. The remaining cash will pay for $7.2 billion in convertible bonds that, if redeemed for shares, would almost double Chinalco’s existing 9.3 percent stake in Rio Tinto Group to 18 percent.

Rio Tinto said that du Plessis _ who joined the Rio Tinto board as a non-executive director in September _ will keep his post as chairman of British American Tobacco PLC.

He also plans to retain is role as a non-executive director of retailer Marks & Spencer Group PLC.

However, he intends to stand down from his roles as a non-executive director and chairman of the Audit Committee of Lloyds Banking Group PLC “in due course.”

Skinner is retiring after 6 years at the helm.

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