Rio Tinto Ltd. (RTP) said Friday it is terminating its planned US$19.5 billion alliance with Aluminum Corp. of China, or Chinalco, and instead launching a US$15.2 billion rights issue and entering into an iron ore joint venture with BHP Billiton Ltd. (BHP.AU).

Rio said the Chinalco deal looked less valuable in the wake of recent market movements and that despite talks with Chinalco on a reworking of the deal, which would have been China's biggest ever overseas investment, it has decided to terminate the deal and pay a US$195 million break fee.

The miner will now carry out a 21-for-40 rights issue to raise US$15.2 billion, with the offer pitched at GBP14 per share in the U.K. and A$28.29 a share in Australia.

Rio also released an unaudited net profit of US$1.60 billion for the first quarter, down from US$2.94 billion last year, and said it won't pay an interim dividend in light of the current macroeconomic outlook. However, it said it does expect to pay a final half dividend.

-By Alex Wilson, Dow Jones Newswires; 61-3-9292-2094; alex.wilson@dowjones.com