BEIJING (AFP) — Chinese aluminium giant Chinalco insisted Friday its multi-billion dollar investment in Anglo-Australian miner Rio Tinto was safe, amid reports the collapse of Lehman Brothers had put it at risk.
Chinalco issued the statement after the Daily Telegraph newspaper of Britain reported the Chinese company was in "urgent talks" with liquidators in Hong Kong to retrieve its nine-percent stake in Rio Tinto.
"There is no basis on which Chinalco's ownership of the shares could be validly challenged or on which its shares could form part of the general assets of (Lehman Brothers International Europe)," Chinalco said in a statement.
It said the shares were held "in a separate designated account pursuant to a custody arrangement with Lehman Brothers International (Europe)."
Chinalco, acting with US-based Alcoa Inc, bought 12 percent of the London-listed shares of the world's third-biggest miner for 14 billion dollars earlier this year.
The transaction gave Chinalco and Alcoa an overall nine-percent stake in the group, which is also listed in Australia.
The Daily Telegraph reported earlier that in a worst-case scenario, Chinalco could suffer a "substantial loss" on its holding.
The brief statement from Chinalco did not address whether the shares in Lehman's custody had been loaned to other clients of the failed US investment bank.
PricewaterhouseCoopers, the administrator of Lehman's European arm, said earlier it was "customary" for Lehman to be allowed to loan shares in its custody, according to Australia's Sydney Morning Herald.
"In effect that entitled (Lehman) to lend such securities in the stock loan or repo markets," PricewaterhouseCoopers said, according to the newspaper.
The result was "that the assets, once 'used', were no longer held for the client on a segregated basis, and as a result the client may cease to have any proprietary interest in them," PricewaterhouseCoopers was quoted as saying.
The initial transaction involving Chinalco was widely seen as a move to block BHP Billiton's unsolicited takeover of Rio, one of its major rivals in the export of lucrative iron ore.
Rio Tinto in Australia said it had no comment on the deal. Chinalco officials could also not be reached for additional comment.
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