Chinalco's Rio Tinto stake lies frozen as custodian Lehman collapses

17 October 2008

Chinalco, state-owned Chinese metals giant, is in a strange position with its entire nine per cent stake in mining major Rio Tinto frozen by the administrators of Lehman Brothers, the custodian of its Rio shares.

Chinaco said it was in discussions with PriceWaterhouseCoopers for the transfer of shares, which constitute its nine per cent stake in Rio Tinto.

The Lehman administrators have frozen all of the failed brokerage's assets, including the 12 per cent stake that Chinalco and Alcoa jointly own in Rio Tinto.

Chinalco, which bought the 12 per cent stake along with Alcoa for around £7.1 billion in February, saw its value hammered by almost £5 billion since then. The 12 per cent stake is now worth £2.4 billion.

Chinalco bought into Rio to have a say in mining giant BHP Billiton's hostile bid for its smaller rival. 

The development comes towards the end of a five-year commodities boom that triggered a global sell-off in equities in resources, minerals and commodities amidst a price boom.