Rio shares pared losses, but were still down 4.6 percent at 1,875 pence at 1514 GMT, compared with a 5 percent loss in the UK mining index. Rio's shares are down by around a fifth since rival BHP Billiton scrapped its $66 billion hostile offer in November, hit also by investor concern over Rio's $39 billion debt load, taken on when it bought Canadian firm Alcan in 2007. Chinalco, the parent of listed Aluminum Corp of China Ltd (Chalco), will potentially double its stake in Australia and London-listed Rio to 18 percent, Rio said, denying it was selling out its independence to China. "This approach is a bit of a worry. They seem to have favoured one shareholder over all the others," said ABN AMRO analyst Warren Edney. CLOSE SCRUTINY The plan is likely to face close scrutiny from the Australian government which wants to ensure investments by foreign state-owned entities do not come with political or strategic strings.