Rio Tinto PLC's (RTP) $19.5 billion agreement with Aluminum Corp. of China would see the Chinese company take a 15% stake in the Escondida copper mine but won't alter the participant agreement with BHP Billiton Ltd. (BHP), a Rio Tinto spokeswoman said.

BHP Billiton owns 57.5% of the mine and has pre-emptive rights to buy Rio Tinto's stake. Rio controls 30% of Escondida but is selling half of that to Chinalco under terms of a broad deal announced Thursday.

"We have structured it to ensure it fully respects all our obligations under the participant agreement," a Rio Tinto spokeswoman said Thursday.

This removes what many analysts had expected to be a stumbling block to Rio's deal with Chinalco, which values the proposed Chinese stake in Escondida at $3.38 billion - over a quarter of its planned total investment in the Anglo-Australian miner's assets. If BHP Billiton's preemptive rights were triggered, it would almost certainly be interested in buying Rio's Escondida stake.

The mine, located in Chile's Atacama Desert, produces around 8.1% of world copper and almost a quarter of Chile's output of the metal. Although production has been falling due to declining ore grades, persons familiar with the matter said there is vast potential for mine development in the unexplored surrounding deposits.

"Escondida is one the crown jewels of Rio Tinto's asset portfolio," said Calyon Credit Agricole analyst Robin Bhar. "For the two parties, it's a great deal: China needs the resources and Rio needs the money," he added.

The Chilean government has a very positive attitude toward foreign investment in the country's mining sector, including China, with whom it has a free-trade agreement. Its state-owned miner Codelco, the world's biggest copper producer, is working with China's Minmetals to develop new business and exploration opportunities in Latin America and in Africa.

Minmetals has traditionally been a trading vehicle for the Chinese in the metals markets, while Chinalco is viewed as the entity for investment in assets.

A Japanese consortium made up of Mitsubishi Corporation (60%), Mitsubishi Materials (20%) and Nippon Mining & Metals Company (20%) holds in total a 10% stake in Escondida, while International Finance Corporation, a division of the World Bank, has the remaining 2.5% interest.

Company Web site: www.riotinto.com

-By Jeffrey Sparshott, Dow Jones Newswires; +44 (0)207 842 9347; jeffrey.sparshott@dowjones.com