The Financial Times in London says the Chinese state-owned aluminium company will walk away after weeks of wrangling over the terms of the deal.
The newspaper said Rio was considering a number of alternatives, which included a $US12 billion rights issue and a joint venture with rival resources giant BHP Billiton.
In reaction, Rio released a statement to say it was "pursuing a range of options" regarding its structure -- but failed to state whether the Chinalco deal would go ahead.
"Rio Tinto notes press speculation. Rio Tinto is pursuing a range of options, some of which are at an advanced stage, for maximising shareholder value and improving the group's capital structure," the miner said.
"A further announcement will be made in due course," it added.
Trading in Rio Tinto shares have been halted.