Rio Tinto has launched a USD 2.7 billion bid to assume full ownership of the Canadian company that owns 66 percent of the giant Oyu Tolgoi copper project in Mongolia.

The Anglo Australian miner has offered CAD 34 a share to buy out the 49 percent of Turquoise Hill that it does not already own, offering a 32 percent premium to the last closing price on the Toronto Stock Exchange.

Rio Tinto chief executive Jakob Stausholm said the company strongly believed in the long-term future of the mine. “That is why we want to increase our interest in Oyu Tolgoi, simplify the ownership structure, and further strengthen Rio Tinto’s copper portfolio,” he said. Mr Stausholm said a successful transaction would provide a more efficient corporate structure and allow Rio Tinto to directly deal with the Mongolian government, which owns 34 percent of the project.

No agreement has been reached between Rio Tinto and Turquoise Hill.

The bid comes just weeks after Rio Tinto and Turquoise Hill cancelled USD 2.4 billion in debt owed by the Mongolian government to settle years of disputes and delays that have plagued the mining giant’s plans to enlarge the Oyu Tolgoi copper project.

The two companies described the deal as a “reset” of their relationship with the host nation by increasing the financial benefits staying in the developing nation. The agreement allowed underground mining operations to commence on a USD 6.9 billion expansion.

Oyu Tolgoi is one of the world’s biggest-known copper and gold deposits. It has had significant delays since construction began in 2019 and the estimated cost has increased from USD 5.3 billion to USD 6.9 billion.

Copper demand is expected to grow strongly in coming decades as the electrification of industry and transport to reduce carbon emissions will require huge quantities of electrical wiring.

Rio Tinto’s progress in growing its exposure to copper comes after its push into lithium, another of the key raw materials needed to build electric cars, faced a setback in January. The Serbian government revoked its licences to develop the USD 2.4 billion Jadar lithium mine following months of large-scale public protests over the project’s potential environmental impacts.

Source: Sidney Morning Herald