Rio Tinto seeking full ownership of Turquoise Hill with $2.7 billion bid

Rio Tinto has made an offer to acquire the 49% of shares in Canada’s Turquoise Hill Resources it doesn’t already own, in a move that would see Rio take full control of the Oyu Tolgoi copper-gold mine in Mongolia.

The US$2.7 billion bid – comprised of $26.6 per outstanding share – resembles a 32% premium on the closing price of TSX and NYSE-listed Turquoise Hill last Friday.

“Rio Tinto strongly believes in the long-term success of Oyu Tolgoi and Mongolia, and delivering for all stakeholders over the long-term,” Rio Tinto chief executive Jakob Stausholm said in the statement.

“[The transaction] will simplify the ownership structure, and further strengthen Rio Tinto’s copper portfolio,” he added.

The offer comes two months after a settlement was reached with the Mongolian government for the delayed $6.9 billion underground development of Oyu Tolgoi, in which Rio agreed to write off $2.4 billion of loans and interest used by the government to fund its share of the project costs.

The vast Oyu Tolgoi mine, located in the South Gobi desert 550 km South of Mongolia’s capital Ulaanbaatar, is controlled and operated by Rio via Turquoise Hill’s 66% stake. The government of Mongolia owns the remaining 34%.

Once completed, the underground development will lift production from 125,000–150,000 tonnes in 2019 to 560,000 tonnes at peak output, making Oyu Tolgoi the biggest new copper mine to come onstream in several years.

Rio last week cut ties with Russian businesses over the invasion of Ukraine, and is currently searching for alternative fuel supplies for Oyu Tolgoi.