LONDON (AP) -- Rio Tinto PLC said Thursday it is "pursuing a range of options" to shore up its debt-laden balance sheet amid growing speculation that the Anglo-Australian mining company is going to walk away from a $19.5 billion deal with China's Chinalco.
Shares in Rio Tinto dropped 7 percent in London trade on the reports that Rio Tinto could instead launch a multibillion dollar rights issue to solve its debt problems and potentially restart talks with rival and former suitor BHP Billiton.
Other reports suggested that Chinalco could be the driving force behind calling off the deal.
In a statement to the London Stock Exchange, Rio Tinto did not directly deny the speculation, but declined to comment in detail.
"Rio Tinto is pursuing a range of options, some of which are at an advanced stage, for maximising shareholder value and improving the group's capital structure," it said in the statement, as executives met in London.
Rio Tinto turned to Chinalco in February to help repair a balance sheet weighed down by $38.7 billion in debt. A payment of $8.9 billion is due in October.
Under the agreed deal, Chinalco would invest $12.3 billion in joint investments in aluminum, copper and ore mining with Rio Tinto, and 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.
But there has been speculation about the status of the deal for several weeks as the market has changed significantly since the deal was first struck.
In mid-May, the debt-laden miner said it was still commited to the deal in response to a request from the Australian Securities Exchange to try to explain a plunge in the company's share price. That share drop interrupted a rally in the stock since February, making the convertible bond that Chinalco was to buy less attractive for its shareholders.
The proposed deal with Chinalco has also sparked opposition in Australia, amid concerns that a foreign state-backed enterprise would own a strategic stake in the country's biggest natural resource assets.
Australia's Foreign Investment Review Board was due to make a decision on the deal, based on national interest, by the middle of this month, with Prime Minister Kevin Rudd's government then having the final say.
If Rio Tinto calls the deal off, it will likely be required to pay Chinalco a multimillion dollar break fee.
Rio Tinto shares closed 7 percent lower at 2,720 pence ($43.85) on the London Stock Exchange.