Rio Tinto in $3.3bn Deal for Control of Mongolian Copper Mine

 

Mining giant Rio Tinto reached in-principle agreement on Thursday to get control of Oyu Tolgoi, a huge mine in Mongolia with the world’s largest known copper and gold deposits.

Rio will pay $3.3 billion for the 49% of shares in Canadian firm Turquoise Hill Resources it does not already own, for direct ownership of the giant copper mine.

Rio will pay C$43 per share in cash for the remainder of Turquoise Hill, a more than 19% premium to the stock’s last close and higher than a sweetened offer of C$40 apiece proposed last month.

The deal, which still needs shareholder approval, gives the global miner ownership of Turquoise Hill’s 66% stake in Oyu Tolgoi, which is 550 km (342 miles) south of Mongolia’s capital Ulaanbaatar.

 

ALSO SEE: Tesla Signed Deal to Buy Nickel Worth $5bn, Indonesia Says

 

 

‘New Energy Minerals’

Global mining firms are looking for growth in commodities such as copper – used in wind turbines, solar power systems and electric cables – and nickel and lithium that are used in batteries for electric vehicles (EVs), as the world gears up to decarbonise.

The takeover process has been ongoing for about six months with Turquoise Hill earlier rejecting the C$34 apiece offer from Rio, citing it was too low.

“Rio Tinto is committed to moving Oyu Tolgoi forward in direct partnership with the government of Mongolia to realise its full potential for all stakeholders,” Rio Tinto chief executive Jakob Stausholm said.

“This agreement … will simplify governance, improve efficiency and create greater certainty of funding for the long-term success of the Oyu Tolgoi project.”

Rio and the Mongolian government, which owns the remaining 34% of Oyu Tolgoi, ended a long-running dispute over the $7-billion expansion of the mine earlier this year.

 

OZ Minerals Takeover Rebuffed

Meanwhile, Rio’s rival BHP Group was rebuffed in a A$8.34 billion ($5.8 billion) takeover bid for OZ Minerals last month, as it looks to shift into clean energy and the EVs market.

BHP has not said if it would sweeten its offer, although analysts and bankers believe it would have to if it wants to secure the asset.

Rio and Turquoise Hill also agreed on Thursday to amend certain financing arrangements to help the Canadian firm address near-term liquidity, the global miner said.

The agreements include increasing an early advance facility agreed in May to $650 million from $400 million and extending the deadline for a $650 million equity raising and debt repayment to at least March 2023.

The amended arrangements also include a commitment by Rio to participate pro rata in an initial equity offering.

A special meeting of Turquoise Hill shareholders to approve the deal is expected in the fourth quarter, and the deal will close shortly thereafter, if approved, Rio said.

 

  • Reuters with additional editing by Jim Pollard

 

 

ALSO SEE:

Rio Tinto Says Mongolia Mine Can’t Halt All Russian Imports

 

Rio Tinto Declares Record $7.7bn Half-Year Dividend

 

Rio Tinto Begins Underground Mine Work in Mongolia

 

Mongolia Stock Market Turns Heads with 133% Gain – Nikkei

BHP Partner Seeks ‘Greener’ EV Metals – The Age

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.