Rio Tinto named a new chairman to help get a planned $19.5 billion tie-up with China's Chinalco approved, as Australian politicians opposed to the deal raised their level of protest on Tuesday.

Designed to help Rio cut its $39 billion debt burden, the deal has aroused political concerns in Australia about key assets falling into Chinese hands and sparked complaints from investors who say one shareholder is being favored over others.

Jan du Plessis, chairman of British American Tobacco Plc , was appointed to the same position at Rio after a previous failed attempt to find a new chairman.

Last month, Rio chairman-elect Jim Leng quit the board after objecting to the Chinalco deal.

Du Plessis, a 55-year-old South African, will continue to be chairman of BAT, a post he has held since 2004. Du Plessis joined Rio's board as a non-executive director in September.

Du Plessis said the deal with Chinalco would give Rio Tinto the best platform to weather the global downturn.

Rio shares were down 3.8 percent at 2,021 pence by 1255 GMT (8:55 a.m. EDT) in London, underperforming a 1.4 percent decline in the British mining index <.FTNMX1770> as copper prices slipped.

So far this year, Rio's London shares have outperformed the mining index by about 30 percent.


One Australian politician took out television ads on Tuesday to push for the Chinalco deal to be blocked.

The Australian government would never be allowed to buy a mine in China. So why would we allow the Chinese government to buy and control a key strategic asset in our country, Senator Barnaby Joyce said in ads airing in Canberra and his home state of Queensland, where Chinalco will pick up stakes in assets.

Under the deal, state-owned Chinalco would pay $12.3 billion for stakes in iron ore, copper and aluminum assets and $7.2 billion for convertible notes that would double its equity stake in Rio to 18 percent.

Australia's treasurer needs to approve the deal on national interest grounds, after which Rio Tinto plans to put the deal to a shareholder vote in an ordinary resolution, meaning it would need support from a simple majority for the deal to go ahead.

However, British shareholders have said the scope of the proposal, which would give Chinalco two seats on the board and joint venture rights on key assets, meant Rio should put up a special resolution, which would require 75 percent support.

Britain's Daily Telegraph newspaper reported Rio Tinto was considering whether to raise the approval threshold to 75 percent. The company declined to comment.

A source close to the transaction said legal advice backed a 50 percent threshold. We've got a strong legal opinion that this is an ordinary resolution, not a special resolution.

Rio Tinto said in its annual report, released on Tuesday, that if the Chinalco deal was not approved and it failed to complete other planned asset sales, it might have to renegotiate $40 billion in credit facilities on more onerous terms.

On Monday, Australia's Foreign Investment Review Board, which advises Treasurer Wayne Swan, extended its review of the complex deal for up to 90 days, moving the deadline to June.

The political furor over the Chinalco deal and other Chinese investments in Australian miners, including a $1.7 billion rescue bid by Minmetals for OZ Minerals Ltd , grew this week in Canberra.

The upper house Senate is expected on Wednesday to endorse an inquiry into whether foreign investment and proposals from state-owned entities to invest in Australian companies are in Australia's national interest.

Australian Greens leader Bob Brown moved on Tuesday to set up an inquiry, but his move was blocked in the Senate after Joyce said he would move a similar motion on Wednesday, to refer the issue to the Senate economics committee.

Trade Minister Simon Crean said he had seen concerns by Rio's fourth-largest shareholder of Sydney shares, Australian Foundation Investment Co, flagging potential conflicts of interest, and said the concerns would be considered by Swan.

Crean said Australians needed to understand the importance of more two-way investment between Australia and China, which is Australia's largest bilateral trading partner and Australia's second largest export market.

Australia is also seeking a free trade agreement with China, although negotiations have stalled. But Crean said the free trade agreement was not being used as a bargaining chip over the foreign investment decisions.

(Additional reporting by Eric Onstad in London; editing by Jonathan Standing and ; Editing by Dan Lalor)