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Chinalco to invest $19.5 billion in Rio Tinto

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(CNN) -- Global mining giant Rio Tinto announced Thursday that China's state-owned aluminum producer Chinalco would invest $19.5 billion in the Anglo-Australian resource giant.

Chinalco's deal with Rio Tinto would mark the largest foreign investment by a Chinese corporation, the Australian Stock Exchange said.

London-based Rio said its deal with Chinalco would help it reduce debt by $10 billion by the end of 2009, the company said in a prepared statement.

In an interview with CNN's Richard Quest, Rio Tinto chief executive Tom Albanese said the deal with Chinalco made financial sense for the mining giant during a period of global financial downturn.

"The very high valuations received on individual slices of each of the assets, the unprecedented premia that we're seeing on the equity as part of the convertible, again, and the ability to weather whatever, two years of difficult financial markets make this a very compelling and very outstanding alternative which benefits Rio Tinto shareholders," Albanese said.

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China's steady rise on the global economic stage also made the deal appealing, Albanese said, giving Rio greater access to Chinese resources and consumers.

Also on Thursday, Rio said its net earnings for financial year 2008 were down 50 percent from the previous year. The $3.7 billion in net earnings for fiscal year 2008 was a sharp from the record $7.3 billion the company recorded in 2007.

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