Chinalco Shares Suspended on Reshuffle Talk, Rio Deal

Shares in Aluminum Corp. of China were suspended from trading on Tuesday amid reports of a management reshuffle and a possible multibillion dollar investment in global miner Rio Tinto. The company gave no reason for the suspensions.

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Aluminum Corp. of China , also known as Chinalco, has seen its share price surge in recent days. On Monday, it jumped 10 percent to 9.56 yuan in Shanghai. Its Hong Kong-traded shares gained 6.4 percent to 4.34 Hong Kong dollars.

A senior official at the company's headquarters in Beijing said there was no public or internal corporate announcement yet of the appointment of former company president Xiong Weiping as chairman of Chinalco, replacing Xiao Yaqing.

The official said that Xiao was still at his post. He spoke on condition he not be identified because he was not authorized to comment publicly on the issue.

The company issued a statement Monday to the Hong Kong Stock Exchange saying it did not know of any reasons for the recent fluctuations in its share price.

However, analysts said investors were betting that the management reshuffle and Rio Tinto deal will come through.

"This might be real because the share price has been surging for five trading days. Investors expect Chinalco to confirm the news and then they can sell at a higher price," said Peng Yunliang, an analyst at Shanghai Securities in Shanghai.

The Chinalco official confirmed that the company was still in talks on a possible acquisition of more Rio Tinto assets. But he said he could not comment further because the talks were "too sensitive."

The Chinese state-run newspaper Economic Observer and other reports Monday said talks on a further investment in Rio Tinto were in the final stages, with a deal expected sometime this week.

Xiong, 52, was president of state-owned Chinalco's publicly listed unit before moving to his current position as a director of China Travel International Investment Hong Kong. It was unclear when he might replace 49-year-old Xiao, who headed Chinalco's purchase a year ago of a 12 percent stake in London-based Rio Tinto for $14 billion.

Hong Kong's South China Morning Post reported Tuesday that Xiao would be promoted to a position on the State Council, China's Cabinet. The report did not name its sources.

Although Chinalco's investment in Rio Tinto has plunged in value amid the crash in metals and other commodities prices, Beijing remains committed to securing long-term resource supplies. Chinalco is trying to expand its holdings though a private share offering worth up to $10 billion, according to Chinese and British media reports.

Rio Tinto has confirmed it is in talks with Chinalco about a possible equity sale. Any deal would require shareholder and regulatory approval.

• Rio's Leng Quits, Not to Become Next Chairman

A deal will hinge partly on Chinalco's success in winning a larger say in Rio Tinto's management, the Economic Observer said.

Both companies are suffering amid the slump in demand for aluminum, which has fallen to 66 cents a pound from a high of about $1.50 a pound in June.

Rio Tinto is trying to pare back its $38 billion in debts through layoffs, asset sales and slashing spending.

Chinalco recently issued a warning that its net profit for 2008 fell by more than 50 percent.

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