MELBOURNE (Reuters) –
U.S. aluminum giant Alcoa Inc (AA.N) is not actively seeking to raise its stake in miner Rio Tinto Ltd (RIO.AX) (RIO.L) despite plans by its ally, Chinalco, to up its Rio holding.
Alcoa and state-owned Aluminum Corp of China (Chinalco) teamed up in February to buy 12 percent of Rio's London shares, or 9 percent of Rio's total share registry, for about $14 billion in a move that followed a hostile takeover bid for Rio from rival BHP Billiton (BHP.AX) (BLT.L).
"We're not actively seeking to increase our stake right now," Alcoa Australia (AA.N) Managing Director Alan Cransberg told Reuters after a speech in Melbourne.
Chinalco vice president and spokesman Lu Youqing said this week Chinalco plans to lift its stake in Rio to at least 14.99 percent after BHP abandoned a $66 billion bid to buy Rio Tinto on Tuesday.
"From Alcoa's point of view ... I would have thought for them to put up more capital would be a fairly high-risk move at this point," said Ben Kakoschke, commodities analyst at Tolhurst.
"Fitch have downgraded the credit rating of (Rio), Moody's are looking to downgrade. So it makes a pretty high-risk move to be throwing more money at it at this stage," he said.
Alcoa has slashed production capacity by 615,000 tonnes, or 15 percent of its total capacity, as aluminum prices have halved since June to around $1,785 a tonne on the London Metal Exchange. Demand has shriveled and inventories held in LME warehouses have ballooned due to a deepening global economic crisis.
Ratings agency Fitch has lowered its rating on Rio Tinto while rating agency Moody's has said it may lower its A3 senior unsecured rating on Rio Tinto as the company generates lower cash and battles high debt levels after its $38.1 billion purchase of Canadian-based aluminum producer Alcan last year.
Lu said Chinalco might consider seeking as much as 49.99 percent of Rio, but that was an idea that had been suggested by investment bankers and was not the company's policy.
Later, Chinalco issued a statement to clarify its stance.
"Chinalco has not made any decision in respect of its investment options in Rio Tinto, including the possibility of increasing its holding above 15.00 percent," it said.
Rio shares last traded up 9 percent at A$46.71 in a broader market (.AXJO) up 3 percent. Rio shares had stood at over A$155 in May.
(Editing Lincoln Feast)