Troubled mining group Rio Tinto is today set to unveil a $19.5bn cash injection from Chinese state-owned Chinalco in a deal that has already sparked an angry backlash from some leading UK shareholders.

The deal, which will involve the sale of minority stakes in some of Rio’s best mining assets and the issue of convertible bonds, marks the biggest ever investment by China in a foreign company.

Chinalco will buy $7.2bn in convertible bonds which will convert into Rio shares at a later date. That would increase its stake in Rio from 9 per cent to 18 per cent. The rest of the capital injection comes from the sale of the minority stakes.

Rio confirmed it was in talks with Chinalco but refused to comment on the details.

The deal will allow Rio to clear a significant amount of its $39bn net debt. The bond sale is split into two tranches and will be priced to convert at $45 and $60 a share.

Rio’s shares rose 3 per cent yesterday in London to £19.54. The bonds will pay a coupon of 9 and 9.5 per cent, and mature in seven years.

Chinalco will also invest $12.3bn in three strategic partnerships with Rio across its copper, aluminium and iron ore divisions.

This will include Chinalco taking minority stakes in a total of nine assets including the Escondida copper mine in Chile, the Weipa bauxite mine in Queensland and the Hamersley iron ore mine in Western Australia.

The Chinese group will also set up a $1bn joint venture to develop other projects with Rio, with each committing $500m.

Chinalco will receive one seat on Rio’s board in return for its investment and have the right to appoint another at a later date.

The deal comes less than a week after Jim Leng abruptly quit as chairman-designate of Rio Tinto following a disagreement with Tom Albanese, chief executive, over a deal with Chinalco.

Mr Leng favoured a large rights issue as the solution to Rio’s debt problems.

Several large UK shareholders are furious over a lack of consultation on the deal after they had earlier offered to inject fresh equity.

“I am absolutely flabbergasted. It is unacceptable at every level,” said one. Another leading investor said: “We told Jim Leng it is better to raise money from us rather than selling the crown jewels.”

Rio will have to seek regulatory approval from the governments affected by the deal which include Australia and Chile.

Rio is also likely to face some opposition from Australian politicians worried that some of the country’s best mineral assets are being sold to foreign interests, and from BHP Billiton, which owns a majority stake in the Escondida copper mine and would like to buy Rio’s 30 per cent stake itself.

Rio is being advised by Morgan Stanley and Credit Suisse. Chinalco is being advised by Nomura, JPMorgan and Blackstone and CICC.

Additional reporting by Kate Burgess