Rio Tinto ramps up bid to control vast Mongolian copper mine
Rio Tinto has made a fresh attempt to take control of the huge Oyu Tolgoi copper mine in Mongolia, after its first bid was rebuffed earlier this month.
The multinational miner has submitted an improved bid for the 49 per cent stake in Turquoise Hill it does not own.
Despite operating Oyu Tolgoi, Rio Tinto does not have a direct stake in the project.
Instead, it owns a 51 per cent stake in Turquoise Hill, which holds a 66 per cent stake in the mining project – with the remainder owned by the Mongolian state.
Under its improved offer, Turquoise Hill has sweetened the deal for minority shareholders – who would receive C$40 per share.
This is an 18 per cent premium to Rio Tinto’s initial proposal of C$34 per share, which was rejected by the company’s board earlier this month.
The new proposal values the minority share capital at approximately $3.1bn – a 56 per cent premium to Turquoise Hill’s closing share price on the Toronto Stock Exchange on 11 March when Rio Tinto announced its first bid.
Rio Tinto offered to buy out minority shareholders in the Canadian vehicle five months ago for $2.7bn, an offer that was rejected two weeks ago by a special committee of independent directors set up by the Toronto-listed group.
Jakob Stausholm, Rio Tinto’s chief executive, said: “Rio Tinto believes this offer not only provides full and fair value for Turquoise Hill shareholders, but is in the best interests of all stakeholders as we work to move the Oyu Tolgoi project forward.”
Rio Tinto’s return with a second offer is not a surprise, with Stausholm refusing to rule out a new takeover attempt after the first bid was snubbed.
Located in the Gobi desert, Oyu Tolgoi is one of the world’s largest deposits of copper.
This is a key metal in the energy transition, since it is used in vast quantities in electric vehicles and renewable projects.
Beginning with initial production volumes of 500,000 tonnes of copper a year, the project is expected to become one of the world’s biggest mines for the base metal once an underground expansion is completed.
Turquoise Hill is preparing to raise equity proceeds to fund the underground expansion.
In total, this is expected to cost $7bn to develop, if Rio Tinto fails to take it over.
Rio Tinto has been plagued with scandal following its destruction of a sacred Aboriginal cave system last year, which sat on top of around £75m worth of high-grade iron ore.
The cave system, in the Juukan Gorge near Pilbara, had shown signs of continued human occupation for more than 46,000 years – before it was blown up.
A new leadership team was brought in after a severe backlash from shareholders, consumers and politicians, and the company commissioned an internal workplace review into its business culture.
This revealed 21 reports of actual or attempted rape in the past five years alongside widespread bullying and discrimination.