Rio makes last-ditch appeal to copper miner’s shareholders

Mining giant Rio Tinto has made a last-ditch appeal to shareholders of Canadian miner Turquoise Hill Resources to back its takeover offer, while hitting out against proxy adviser Institutional Shareholder Services’ (ISS) objection to the bid.

Rio moved in September to take full control of the copper miner, offering investors C$43 per share in a deal worth $4.85 billion. A successful takeover would give the miner firm grip over one of the largest known copper and gold deposits in the world.

Copper is expected to play a crucial role in the global drive towards net-zero, with the metal a key ingredient in building greener technology and infrastructure.

Rio already owns a majority 51 per cent stake in Turquoise Hill but wants to gain full control of the remaining 49 per cent. Turquoise owns two-thirds of the troubled Oyu Tolgoi mine in Mongolia, an asset also part-owned by the Mongolian government, which has had significant construction delays and estimated cost blowouts of between $US5.3 billion to $US6.9 billion.

In an open letter to Turquoise Hill’s shareholders, Rio said the design, development and ramp-up of production from the major underground block-caving Oyu Tolgoi project would take an additional US$3.6 billion investment.

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“We are all shareholders in Turquoise Hill because we believe in the long term potential of the Oyu Tolgoi project in Mongolia. But we must also recognise that we have a long way to go before its full value is unlocked,” Rio’s letter said.

The miner also lashed out at investment adviser ISS, which has told Turquoise Hill’s shareholders that Rio’s offer isn’t high enough.

ISS has told shareholders to vote against Rio’s offer, aligning itself with the Canadian miner’s second-largest shareholder – Pentwater Capital Management – in saying “the offer does not represent a suitable value for shareholders”. Another top Turquoise Hill shareholder, SailingStone Capital Partners, is also against the deal.