Rio Tinto (ASX:RIO) shares have fallen sharply on the ASX overnight as speculation mounts that the diversified mining company may be close to axing its planned $US19.5 billion deal with Chinalco.
Rio Tinto shares fell as much as 11% to A$58 per share on the ASX.
The deal with the Aluminum Corporation of China (Chinalco) was struck in February to provide funds to pay down some of Rio Tinto's huge debt of about $US39 billion.
Under the proposed deal, Chinalco would increase its stake in Rio Tinto from 9.3% to 19% stake.
However, since the plan was announced in February, the Rio Tinto share price has recovered from its low point and commodity prices have recovered some of the losses, removing some of the pressure to complete a deal with Chinalco.
What the company would do to repair its balance sheet and repay large debt levels if the Chinalco deal falls through is still an unknown.