A Challenge for Chalco?

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We reported back in February on Chalco’s skillful purchase (with Alcoa) of 12 percent or Rio Tinto. But that was before the financial crisis and the collapse of Lehman Brothers.

Lehman’s collapse has left Chalco with some “issues”. It is already reported to have delayed a bond sale (in the Australian):

    “ALUMINIUM Corporation of China today delayed a combined CNY8 billion bond sale, while it arranged to transfer a stake in Rio Tinto held in an account with a unit of Lehman Brothers.

    Traders said the yields on the bonds already issued by the parent company, Chinalco, had risen sharply in the last two sessions because of concerns over the stake.

    But Chinalco said in a statement the shares don’t form part of the assets of Lehman Brothers and the ownership of the shares isn’t open to challenge. It said it is in discussions with the administrators of Lehman Brothers International Europe over the “orderly transfer” of the shares.

    “There is no basis on which Chinalco’s ownership of the shares could be validly challenged or on which its shares could form part of the general assets of LBIE,” Chinalco said.”

Let’s hope so for their sake, the sake of their advisors – and for the development of Chinese overseas direct investment generally. Rumours are circulating that the situation might be…more complicated than it first seemed. We will watch progress with interest.

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