Rio Tinto shares fell sharply amid on-going speculation the resources giant may alter or scrap its planned $US19.5 billion ($25.9 billion) deal with a Chinese company.
Rio Tinto shares ended the day down 12%, $7.65, to $57.60. Shares in BHP Billiton were also off 6.2%, or $2.13, to $32.30.
The deal with the Aluminum Corporation of China (Chinalco) was struck in February to provided funds to pay down some of Rio Tinto's huge debt of about $US39 billion.
"The Chinalco deal looked like a cheap deal for the Chinese," said Chris Kimber, a client adviser, with Bell Potter Securities in Sydney, adding that the market was bracing for a rights offer.
"That is why they have come off because once the share price got up to those levels, the Chinalco deal doesn't look like a good deal any more. So, it wouldn't surprise me to see (the deal) called off."
Under the proposed deal, Chinalco would increase its stake in Rio Tinto from 9.3% to 19% stake.
But since the plan was announced in February the prices of commodities has rebounded, and with it the Rio Tinto share price.
Many investors have expressed disapproval that the deal would give Chinalco $US7.2 billion in convertible bonds at a strike price of $US45.
At the time the deal was signed, the strike price was a significant premium on the worth of Rio Tinto shares.
In London on Wednesday the price of Rio Tinto plc shares fell10.64%.
''It is all this bubbling along of the permutations and combinations in respect to what is going to happen to Chinalco and takeover and BHP (Billiton) on the sidelines and rights issues,'' Austock Securities senior client adviser Michael Heffernan said.
''Nothing has been announced by the company. It is all speculation.''
The fall to Rio Tinto's share price came amid smaller declines amongst other miners, following a slip in commodity prices overnight.
Before the deal with Chinalco proceeds, Rio Tinto needs to secure the approval of regulators in Australia and China, and its shareholders.
Rio Tinto has repeatedly said it is commited to the Chinalco deal.
But political heat has been applied, with Australian opposition leader Malcolm Turnbull saying he would not support the deal in its current form.
UK newspaper The Times on Wednesday quoted an analyst saying the Chinalco deal was in the ``critical ward'' and a rights issue and asset sale now look appeared to be a more likely alternative.
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