Rio Tinto has made a $2.7bn cash offer for Turquoise Hill’s remaining shares in a bid to gain control of a Mongolian copper-gold mining project.
The non-binding offer for the remaining 49 per cent of Turquoise Hill’s share capital was made at a price of C$34 per share, representing a more than 32 per cent premium on the company’s Friday close price. The transaction would give the FTSE 100 mining giant full control of Turquoise Hill’s 66 per cent stake in the Oyu Tolgoi mine in Mongolia.
“The Proposed Transaction would enable Rio Tinto to work directly with the Government of Mongolia to move the Oyu Tolgoi project forward with a simpler and more efficient ownership and governance structure,” said Rio Tinto chief executive Jakob Stausholm.
“With our relationship reset and the underground operations commenced, this transaction demonstrates our clear and unequivocal long-term commitment to Mongolia,” Stausholm added.
The offer comes after Rio Tinto settled a long running dispute with the Mongolian government in January over the $6.93bn expansion of the Oyu Tolgoi mine.
The Mongolian government has a 34 per cent stake in Oyu Tolgoi, one of the largest copper and gold deposits in the world. Rio Tinto controls the remainder through its 51 per cent stake in Canada’s Turquoise Hill Resources.
Under the January settlement Turquoise Hill agreed to cancel $2.4bn in debt owed by the Mongolian government and the expansion project committed to purchasing energy from the Mongolian grid.
The miner has made headlines consistently this year – with Rio Tinto revelling in a £12.4bn shareholder payout last month, the second largest in the history of the London Stock Exchange.
Recently, it also announced plans to cut ties with Russia, which includes its Queensland-based alumina joint venture with Rusal.
Earlier this year, Rio Tinto published a damning review of its workplace culture – including complaints of widespread racism and bullying, alongside multiple reports of sexual assault.