Rio Tinto lifts bid to take direct control of Mongolia’s Oyu Tolgoi copper mine
The mining group Rio Tinto has raised its offer to take direct control of the huge Oyu Tolgoi copper mine in Mongolia, a few weeks after the rejection of its initial offer.
The FTSE 100 group said on Wednesday it had raised its bid for the stake it does not already own in Turquoise Hill Resources, which owns two-thirds of the Oyu Tolgoi project, to $3.1 billion.
Rio offered to buy out minority shareholders of the Canadian vehicle in March for $2.7 billion, an offer that was rejected this month by a special committee of independent directors set up by the Toronto-listed group.
Rio, brimming with cash thanks to soaring commodity prices, returned on Wednesday to offer C$40 (US$30.79) per share, an 18% improvement over the previous offer and a premium of 56 % from the closing price of Turquoise Hill the day before the original. offer in March.
The project is vital for Rio, which derives most of its revenue from iron ore, a steelmaking ingredient, to shift to the metals needed for a low-carbon economy.
Managing Director Jakob Stausholm said the company “believes this offer not only delivers full and fair value to Turquoise Hill shareholders, but is in the best interests of all stakeholders as we work to move the project forward.” Oyu Tolgoi”.
Shares of Turquoise Hill jumped 21% on Wednesday, while those of Rio in London fell 2%.
Although Rio operates Oyu Tolgoi, it has no direct stake in the project, instead holding a 51% stake in Turquoise Hill, which in turn owns 66% of Oyu Tolgoi. The rest is owned by the Mongolian state.
Located in the Gobi Desert, Oyu Tolgoi is one of the largest deposits of copper in the world, a vital metal for the energy transition since it is used in large quantities in electric vehicles and renewable projects.
Beginning with initial production volumes of 500,000 tonnes of copper per year, the project will be one of the world’s largest mines for the base metal once the underground expansion is complete.
Big diversified mining companies are keen to get their hands on copper projects as production needs to double by 2035 to electrify the global economy and meet emissions targets, according to S&P Global. But they have been reluctant to spend big on acquiring projects after a decade of capital spending discipline.
In a sign of change, BHP Group this month had a $5.8 billion bid to acquire Oz Minerals rejected. The world’s largest mining group made the offer after copper prices fell sharply from a record high in March above $10,600 a ton to their current level of around $8,000 a ton.
Turquoise Hill is set to raise equity to fund the underground expansion, which is expected to cost a total of $7 billion to develop, if Rio fails to support it.