By Sonali Paul and Alfred Cang

Leng, deputy chairman of India's Tata Steel , was named as Rio's next chairman just over three weeks ago. Rio gave no explanation on Monday for why he was resigning.

Last week, Rio said it had held talks with Chinalco, China's largest aluminum producer, about selling it convertible notes and stakes in some assets, but declined to comment further.

"The two companies are still in talks," Chinalco vice president Lu Youqing told Reuters on Monday.

He could not confirm a timeframe for a deal, which a Chinese newspaper reported was likely to be sealed before Thursday, when Rio Tinto releases its annual results.

Another deal potentially in the offing is a sale of an asset, possibly Rio's 75 percent stake in coal producer Coal & Allied Industries , to Japanese trading group Mitsui & Co <8031.T>, the Australian Financial Review reported.

The move comes as Rio scrambles to sell assets and has axed jobs and projects to meet its target of reducing debt by $10 billion this year, but the sales have taken longer than expected against a backdrop of tumbling global commodity prices.

Rio shares rose 5.7 percent to A$49.40 in a broader market <.AXJO> up 1.1 percent, as investors focused on the prospect that Rio would announce a deal this week to wipe out concern about $8.9 billion in debt due in October.

Fund managers and analysts said Leng's departure could be due to some big difference in view over Rio's plans for a deal with Chinalco, other asset sales, a rights issue, or even its view on the carrying value of the Alcan business it bought for $38 billion in 2007.

"One scenario is there's a deal that's imminent where the terms might not have been agreeable to him," said Tim Schroeders, a portfolio manager at Pengana Capital, which owns Rio shares.

"There's also a scenario that suggests he may have agreed to take on the role contingent on certain things happening that would put the company in better shape before he takes his position, and they haven't met that objective."

He added there was also speculation Leng might be lining up to take on another chairmanship.

Leng did not immediately reply to an e-mail query from Reuters.

Chinalco bought a 9 percent stake in Rio with U.S. aluminum giant Alcoa a year ago. The stake is now worth about one-third of the 60 pounds a share they paid.

NEW HEAD AT CHINALCO

At the same time as Rio is getting a new chairman, Chinalco spokesman Lu said the company's president Xiao Yaqing will be replaced by former executive Xiong Weiping, although the move had not been announced, even internally.

An analyst in Hong Kong said he did not expect any major change under the new president.

"They don't really have as much control as people might think. What I'm saying is I don't think the man matters so much as the times," said Larry Grace, analyst at Kim Eng Securities in Hong Kong.

Rio has been moving quickly to pare debt after bigger rival BHP Billiton Ltd/Plc scrapped a hostile takeover bid for it last November.

Rio Chairman Paul Skinner said last month he would step down earlier than planned. The company said he will now remain in the post until mid-2009 to allow time to appoint a successor.

"Paul Skinner staying on longer could be a positive as Rio is not yet through its turmoil. It's yet to deal fully with its debt, iron ore negotiations are going on and things have yet to settle down," said Peter Chilton, resources analyst with Constellation Capital Management in Sydney.

Skinner was considered the preferred candidate to take over as chairman of British oil giant BP in April, but some shareholders have raised concerns about the planned appointment in light of Rio's woes, according to recent news reports.

Two investment bankers suggested Skinner found a way to stay on at Rio because he was no longer seen as the favorite to take over as chairman of BP.

(Additional reporting by James Regan and Denny Thomas; Editing by Anshuman Daga)