Rio Tinto’s US$19.5 billion investment deal with Chinalco has passed its latest obstacle after it obtained approval from the Committee on Foreign Investment in the United States (CFIUS), Rio announced to the Australian Securities Exchange this morning.
The approval from CFIUS was needed due to selling direct stakes in assets, specifically Rio’s Kennecott Utah copper operation in the United States, as well as the issue of convertible bonds to Chinalco.
According to Rio, CFIUS approval meets a regulatory condition of the proposed deal with Chinalco.
This latest update in the deal’s progress comes at the same time as a report from investment bank UBS which has found that BHP Billiton may be a better investment partner for Rio instead of Chinalco.
According to the author of the report, Sydney-based analyst Glyn Lawcock, BHP and Rio could save as much as US$10 billion by combining their iron-ore assets in the Pilbara region of Western Australia through a merger or joint venture.
“’BHP could propose to assist in underwriting a substantial rights offering for Rio,” Lawcock wrote in the report.
“In exchange they could propose an iron-ore joint venture in the Pilbara.”