rio reply to concerns

Reply to email voicing my concerns over the Chinalco deal.


Dear Concerned shareholder

Thank you for your thoughts and views.

Under the proposal, Rio Tinto’s balance sheet will be significantly strengthened through the receipt of US$19.5 billion in cash proceeds from Chinalco.

Chinalco will make minority investments totalling US$12.3 billion through a series of joint ventures in a number of Rio Tinto’s operating businesses. Chinalco will also make a substantial investment of US$7.2 billion in Rio Tinto by way of a convertible bond, potentially taking its shareholdings to about 18 per cent of the total Rio Tinto Group.

These investments are to be made at premium valuations, which secure full value for shareholders despite today’s market conditions.

Taken as a whole, this strategic partnership is a very significant step for Rio Tinto, which we believe places the Group in a better position to meet future challenges and opportunities.

In any partnership governance is critical and we have defined robust controls both at the Board and at the operating levels. At the operating level, the proposed joint ventures mirror closely the standard joint venture arrangements that are typical for our industry. Rio Tinto has already benefited for more than forty years from joint ventures with partners around the world, including from China and Japan.

The Chinalco proposal offers a comprehensive and attractive financial solution on terms which do not constrain our strategic or operational flexibility in the future.

Rio Tinto will continue to control Rio Tinto assets, and the Rio Tinto Board will continue to run Rio Tinto.

Rio Tinto has negotiated a series of agreements under the strategic partnership that guarantee an arms-length relationship for matters such as pricing, and investment decisions will not be compromised in any way.

regards

Dave Skinner

Manager investor relations