Chinalco boss lives up to dealmaker reputation

Chinalco President Xiao Yaqing answers a question at a news conference in Sydney in this file picture taken February 4, 2008. Chinese state-owned aluminium group Chinalco said on February 12, 2009 that they will invest $19.5 billion in miner Rio Tinto in a deal that will secure resource supplies for China and help cut Rio's debts, but also raise regulatory scrutiny. Picture taken February 4, 2008.

HONG KONG (Reuters) - Xiao Yaqing, president of Chinese aluminum giant Chinalco, has been called many things -- competitive, ambitious, ruthless -- even before his $19.5 billion gamble with miner Rio Tinto was revealed on Thursday.

Xiao, 50, stands out in the tightly-controlled world of China's state-owned industries, where executives are expected to keep a low profile, star power is muted and salaries are low by western standards.

Thursday's mega deal in which debt-laden Rio Tinto agreed to a $19.5 billion cash injection from Chinalco, is in character for Xiao, who has been vocal about his determination to find a place for Chinalco on the global stage.

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In China, Xiao and Chinalco are known for aggressively seeking acquisitions, both domestic and international.

Xiao, who took control of Chinalco in 2004, "is the mastermind of the whole Rio deal," said a Hong Kong-based analyst, who declined to be named due to the sensitive nature of making personal comments about China's top executives.

"I don't know if they will be a global mining giant, but they'll just be more international, and this will get them a seat at the table," said Larry Grace, analyst at Kim Eng Securities.

This is Xiao's second bite at Rio Tinto, the world's second-largest iron-ore miner.

Last year, he engineered Chinalco's purchase of 9 percent of Rio Tinto together with Alcoa Inc for $14 billion, after he made it clear Chinalco would morph from a one-trick pony into a diversified mining giant with overseas deals.

"This is our first major overseas acquisition, but definitely not the last," Xiao told reporters last year.

But Thursday's deal may be his swan song.

Rumors abound that Xiao, like many executives at state-owned firms, is leaving China's largest aluminum and alumina producer for another government post.

This week, Hong Kong-based newspaper Ming Pao Daily cited unnamed sources saying Xiao is set to serve as vice secretary general of China's cabinet, the State Council.

On Monday, Chinalco confirmed reports that Xiao will step down as president, but listed arm Chalco -- where Xiao serves as chairman -- denied rumors there would be changes in its board and senior management.

"PRAGMATIC AND SINCERE"

Born in 1959, Xiao is among the first generation of Chinese business leaders to be educated after the upheaval of the Cultural Revolution.

After graduation from Central South Institute of Mining and Metallurgy in Changsha, Hunan Province, he was assigned to Northeast Light Aluminum Co.

Over the next 17 years, he rose through the ranks from engineer to general manager, before transferring to Southwest Aluminum Group as chairman and CEO.

Xiao oversaw Southwest Aluminum's restructuring and integration into Chinalco. Four years later, in 2004, he became Chinalco's party boss, chairman and CEO, and the head of its listed arm, Chalco.

"He is pragmatic and sincere," said the Hong Kong-based analyst. "He has been spending a long time in factories and knows a lot about the industry."

(Editing by Valerie Lee)