Shares of Rio Tinto fell Wednesday as speculation increased that the Australian government may reject a proposed US$19.5 billion investment by Aluminum Corp. of China (Chinalco), the Wall Street Journal reported. In Australia, shares in Rio fell 8.7% to close at A$47.50 (US$32.21), off an earlier low of A$46.96 (US$31.84), as traders noted the growing political agitation about the Chinese deal. The renewed fears about the arrangement spooked investors who were concerned about the prospect of a discounted rights issue as an alternative. Australia’s senate has agreed to conduct an inquiry into foreign investment and will issue a report in June. The report’s publication will likely coincide with a decision by Australian Treasurer Wayne Swan on whether to approve the Chinalco deal.
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