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Chinalco, Rio Tinto Deal On Hold

Australia's foreign investment regulator has deferred its decision on whether China's biggest aluminum producer can double its stake in Rio Tinto.

SYDNEY (AP) -- Australia's foreign investment regulator has deferred its decision on whether China's biggest aluminum producer can double its stake in Rio Tinto in a deal meant to help the miner shrink its debt.

The Foreign Investment Review Board barred the Aluminum Corp. of China, or Chinalco, from going with the purchase for another 90 days while it continues a review of the proposed $19.5 billion deal.

The decision was published Monday in a government gazette, and the Anglo-Australian miner confirmed it in a statement to the Australian Securities Exchange.

Chinalco has offered to invest $12.3 billion in joint investments in aluminum, copper and ore mining with Rio Tinto, and to spend $7.2 billion on convertible bonds in the company. If redeemed for shares the bonds would almost double Chinalco's existing 9.3 percent stake in Rio Tinto Group to 18 percent.

London-based Rio Tinto's board has backed the deal, which will help it deal with about $40 billion in debt that is mostly attributable to its purchase of Canadian aluminum producer Alcan Inc. in 2007.

Rio Tinto's share price in Australia fell sharply Monday along with other mining stocks, ending trade almost 2.5 percent lower at 50.75 Australian dollars.

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