Rio Tinto wins fight for control of copper miner: Multi-billion pound takeover of Canadian miner Turquoise Hill complete
Rio Tinto has completed its multi-billion pound takeover of Canadian miner Turquoise Hill.
It marks a final victory in the FTSE 100 mining giant’s long-running and contentious struggle to control the Mongolian copper mine.
Rio owns 66 per cent of the Oyu Tolgoi project, which contains some of the world’s largest copper and gold deposits, with the remaining 34 per cent controlled by the Mongolian government.
Struggle: The battle for control of Turquoise Hill is part of a long-running list of difficulties Rio has faced
‘Oyu Tolgoi is an outstanding asset with incredible people that will deliver significant long-term value for Rio Tinto and Mongolia,’ said chief executive Jakob Stausholm.
Rio had previously owned 51 per cent of Turquoise Hill, which controlled the 66 per cent stake, but in March made a move to take full ownership of the company with an offer of £2.3billion to buy out the other shareholders.
But the investors initially turned down the bid, forcing Rio to raise its offer to £2.6billion over the summer before making a final bid worth £2.9billion at the time which was accepted by 60.5 per cent of Turquoise Hill’s minority shareholders in a vote earlier this month.
Despite securing approval, Rio’s offer was heavily criticised by some minority shareholders, including investment group SailingStone Capital Partners, who previously said the acceptance would be one of ‘the biggest corporate governance failures’ in history. Activist investor Pentwater Capital Management also voiced its disapproval, arguing the price was far below the free cash flow Turquoise Hill was expected to generate over the next decade.
The battle for control of Turquoise Hill is part of a long-running list of difficulties Rio has faced as it tries to develop the Oyu Tolgoi mine. The company was previously locked in a long-running feud with the Mongolian government over a £5.7billion expansion for the mine as authorities began to complain that the economic benefits for the country were being eroded.
It saw Stausholm visit Mongolia multiple times in a bid to salvage the project, which has consistently been dogged by delays, cost overruns and arguments over funding which have strained relations between the company and the government in Ulaanbaatar.
The dispute was settled in January when Rio agreed to waive £2billion in debt owed to it by the government.
Rio’s drive to control Oyu Tolgoi comes as it looks to take advantage of an expected boom in demand for copper as the world shifts towards clean energy technology and electrification.
The company has maintained its course despite a slump in prices of the metal this year amid fears of reduced demand from China and a slowdown in the global economy.