While Western countries continue to reel from the financial storm, snapping up their battered foreign assets seems an appealing choice for Chinese investors. But with the painful memories of previous setbacks, investors are taking a more cautious approach to overseas forays. China Aluminum Corp. (Chinalco) is just one of the companies picking through the wreckage to find the best bargains.

HEAVY LIFTING: Chinalco, the largest aluminum maker in China, has been trying to expand its business globally in recent years (LIU GUANGMING)

On February 12, the country's largest aluminum maker said it was investing $19.5 billion in Australia's Rio Tinto Group in a deal that would mark the country's largest overseas investment so far. As the world's third biggest diversified mining group by market value, Rio Tinto trades on both the Australia and London stock exchanges and maintains a global presence.

Under the agreement, Chinalco would pay $12.3 billion for minority stakes in some of Rio Tinto's prime assets, including several key iron ore, copper and aluminum operations around the world. The rest of the investment would come from the issuance of convertible bonds to Chinalco, which could later double its stake in the miner to 18 percent by converting the bonds into shares. The bond issue represents a substantial premium to the current price of Rio Tinto shares trading on the London Stock Exchange.

MUTUALLY BENEFICIAL: Xiao Yaqing, former General Manager of Chinalco, and Paul Skinner, Chairman of Rio Tinto, are confident that the Chinese company's proposed $12.3-billion investment will be approved by the Australian mining company's shareholders (MA JIANGUO)

Chinalco obtained its original 9-percent stake in Rio Tinto last February when it teamed up with American aluminum producer Alcoa Inc. to buy into the Anglo-Australian miner. This move successfully scuppered a $66-billion hostile bid for Rio Tinto by Australian mining giant BHP Billiton, which would have created a mining behemoth that monopolized global iron ore supplies.