Odey accuses Rio Tinto of destroying value over Mongolian mine

Odey Asset Management has accused Rio Tinto of destroying value through lack of action over problems at Turquoise Hill, through which Rio Tinto owns a giant copper mine in Mongolia.

Odey said Rio Tinto was allowing a false market for Turquoise Hill’s shares with a rights issue from the Canadian company on the horizon. Crispin Odey’s fund owns shares in Rio Tinto and has a short position in Turquoise Hill.

In a letter to Rio Tinto’s finance chief Jakob Stausholm the fund said Turquoise Hill would require an $8.9bn rights issue after delays and budget overruns at Oyu Tolgoi. Odey called on Stausholm to set out whether Rio Tinto intends to underwrite the rights issue so that shareholders can understand the company’s position.

Rio Tinto slashed copper reserve forecasts for Oyu Tolgoi and increased cost estimates in July. The project aims to be one of the world’s biggest sources of copper and is seen as Rio Tinto’s most important growth asset.

Odey’s scrutiny of Oyu Tolgoi is led by Henry Steel, a former executive assistant to Rio Tinto’s chief financial officer in 2011. Steel manages Odey’s concentrated natural resources fund.

“As chief financial officer of Rio Tinto, as well as a director of the Rio Tinto, Odey believes that you now have a fiduciary duty to rectify the situation immediately,” Steel wrote to Stausholm.