Is Rio Tinto's $19.5 Billion Deal Still on Track?

In today’s world, it’s tough to raise capital. But try raising $19.5 billion.

Well, in the case of Rio Tinto Group (RTP), the company has been able to strike an agreement to raise this amount from Aluminum Corp. of China (ACH). However, as should be expected, there’s been buzz that the deal will fall through. For example, the Australian government may reject the deal.

So to dampen such talk, Rio Tinto Chairman, Jan du Plessis, has made public statements indicating that the transaction is on track.

The company, which is the #3 miner in the world, certainly needs the capital infusion, as the debt load is a staggering $38.9 billion (a big part was the result of the acquisition for Alcan). In fact, Rio Tinto said it will unload certain assets (for $12.3 billion).

But, the fact remains that the global environment is improving. In other words, Rio Tinto may come back to the table and renegotiate terms. If anything, it’s possible to instead pull off a rights offering, which seems doable. Or, Rio could reach out to another strategic investor – say BHP Billiton (BHP) – to snag capital.

Yes, options are always nice — especially when you’re trying to raise a huge amount of capital.