The deal marks the biggest ever investment by China in a foreign company and will come under intense scrutiny from Australian politicians. It has already sparked an angry backlash from Rio's leading investors in the UK who are furious over a lack of consultation on the deal after they had earlier offered to inject fresh equity.

Under the terms of the deal, Chinalco will buy $7.2bn in convertible bonds which will convert into Rio shares at a later date. That would increase its stake in Rio from 9 per cent to 18 per cent. The rest of the capital injection will come from the sale of the minority stakes.

Rio's Australia-listed shares closed on Wednesday at A$52 each, while in London the shares were 3 per cent higher at ￡19.54. Rio confirmed it was in talks with Chinalco but refused to comment on the details.