Rio Tinto PLC (LSE:RIO) announced a US$2.7bn offer to buy the 49% interest it does not already hold in Canada’s Turquoise Hill Resources Ltd (TSX:TRQ) with the aim of moving forward the Oyu Tolgoi copper project in Mongolia and strengthening its copper portfolio.
The offer would see Turquoise Hill’s minority shareholders receive C$34 per share, which is a 32% premium on the latest closing price for the shares on the Toronto Stock Exchange.
Oyu Tolgoi, which is one of the world’s largest copper and gold deposits, is 66% owned by Turquoise Hill, with the Mongolian government holding the remaining shares. The project has seen significant delays since construction began in 2019.
The offer follows the recent agreement between Rio Tinto, Turquoise Hill and the Mongolian government to move the Oyu Tolgoi project forward, reset the relationship between the partners and approve commencement of underground operations, Rio Tinto said.
As part of that deal, Turquoise Hill agreed to waive a US$2.4bn carry loan owed to it by the Mongolian government.
"Rio Tinto strongly believes in the long-term success of Oyu Tolgoi and Mongolia, and delivering for all stakeholders over the long-term,” said Rio Tinto chief executive Jakob Stausholm.
“That is why we want to increase our interest in Oyu Tolgoi, simplify the ownership structure, and further strengthen Rio Tinto's copper portfolio.”
Stausholm said taking full ownership of Turquoise Hill "would enable Rio Tinto to work directly with the government of Mongolia to move the Oyu Tolgoi project forward with a simpler and more efficient ownership and governance structure.
“With our relationship reset and the underground operations commenced, this transaction demonstrates our clear and unequivocal long-term commitment to Mongolia."