Mining giant Rio Tinto, in its attempt to avoid a rights issue and ease its debt burden, is working towards securing a deal with the state-owned Chinese aluminium producer Chinalco, in a few of its operations.

Rio Tinto hopes to sell some bonds to Chinalco, along with some stakes in mines, aiming to cut its £7 billion debt by the end of this year. The mining company has had to bear the burden of the debt ever since it took over Alcan, coinciding with the onset of the credit crunch in mid-2007.

Rio Tinto has confirmed the ongoing negotiations, after the media speculated the move. Chinalco is already a Rio shareholder, with 9 percent stake. With the deal coming through, Chinalco's stake would increase to at least 15% if new shares are issued.

A statement from the company said: "Rio Tinto confirms that it has held discussions with Chinalco regarding Chinalco acquiring minority interests in various operating businesses of the Rio Tinto group and also investing in convertible instruments."

Though the announcement to the Australian Securities Exchange did not divulge details about the size of Rio's deal with Chinalco, it is expected to be for at least £6 billion. Rio has emphasized that the deal has to meet the approval of both regulators as well as shareholders.

If the deal gets through, it would symbolize a shift in power between recession-hit developed countries and rapidly-growing Asian economies!