Aluminum Corp of China's US$14.05 billion investment in iron ore giant Rio Tinto not only marks the mainland's largest overseas acquisition but transforms Chinalco into a diversified mining company.
'Rio is just not about iron ore,' Everbright mining analyst Wayne Fung said. 'Chinalco is transforming from a pure aluminium play into other metals like copper, tin, titanium and other kinds of production.'
Chinalco in August last year completed an US$860 million takeover of Peru Copper, giving it total copper reserves of about 20 million tonnes.
The purchase with joint-venture partner Alcoa makes the state-owned firm the biggest shareholder in the world's third-biggest miner and also signals Beijing's willingness to be more aggressive in securing future resources.
It is a potential deal killer for BHP Billiton, which made a bid for Rio Tinto late last year. Speculation that Beijing would not tolerate a near-monopoly in the iron ore trade in any BHP-Rio tie-up surfaced soon after BHP announced its bid in November. Baosteel Group Corp reportedly approached Nippon Steel and Posco Steel about a counter-bid but nothing came of the effort.
Baosteel denied it was planning to make a bid for Rio after the mainland's 21st Century Business Herald reported on December 4 that chairman Xu Lejiang said the possibility of a bid from Baosteel or other mainland steelmakers was high.