Chinese mining giant Chinalco has expressed regret and disappointment that its proposed $24.1 billion investment in Rio Tinto has been scrapped.

Rio advised today that it would instead form a joint venture with BHP Billiton covering its Pilbara iron ore mining operations and launch an $18.96 billion rights issue.

The original Chinalco deal had been proposed as a means for Rio Tinto to pay down part of its $48.27 billion debt burden, mostly accrued to pay for its acquisition of aluminium producer Alcan, and secure its future.

But Rio said today the Chinalco deal, which would have lifted the China state-owned enterprise's stake in the company to 18 per cent and given it small stakes in various key mining projects, was no longer viable.

The proposal had also raised the ire of UK institutional shareholders and whipped up a political storm in Australia about foreign ownership of the country's mining assets.

Chinalco president Xiong Weiping confirmed Rio's announcement this morning that the deal had fallen through and expressed "great regret".

"In recent weeks, Chinalco has worked hard to respond constructively and engage with Rio Tinto to make appropriate amendments to the transaction terms announced in February to better reflect the changed market background and feedback from shareholders and regulators," the company said in a statement.

"As a result we are very disappointed with this outcome."

Chinalco said it would continue to explore opportunities to advance it strategic objectives in the meantime and would monitor developments at Rio as its single biggest shareholder.

It said it would also monitor development on the joint venture between Rio Tinto and BHP Billiton.

PERTH