The multinational mining company Rio Tinto, has upped its offer to take direct control of Turquoise Hill Resources.
Announced on Wednesday, the FTSE 100 group said that it had raised its offer for the stake it does not already own in Turquoise Hill Resources, to $3.1 billion.
Earlier this month, the Rio Tinto Group had a $2.7 billion offer rejected. At stake is direct control of potentially the world’s fourth largest copper mine. The Oyu Tolgoi project in Mongolia is expected to have an eventual production rate of over 500,000 metric tons of copper per annum.
Whilst Rio Tinto Group does at present operate the Oyu Tolgoi, it does not have a direct stake in the huge copper mine. Rio Tinto has a 51% stake in the Canadian mining company Turquoise Hill Resources. The London-based mining company owns 66% of the Pyu Tolgoi project. The remaining percentage is owned by the Mongolian government.
A previous offer of $2.7 billion was rebuffed by Turquoise Hill Resources. The company said the offer doesn’t:
“fairly reflect the fundamental and long-term strategic value of the company’s majority ownership of the Oyu Tolgoi project.”
Located in the harsh conditions of the Gobi desert, the Oyu Tolgoi project is still far from completion. Once the underground excavation is completed, the mine is expected to yield one of the biggest copper deposits in the world. It comes at a time when commodities like copper, used in the production of electronics and electric cars, like nickel, are in high demand.
Rio Tinto Pivot
The purchase of Tourquoise Hill Resources by Rio Tinto is seen as integral to Rio Tinto’s future strategy. At the moment, the mining company generates most of its revenue from extracting iron ore. The mineral is an essential part of the steel-making process. However, the purchase of the Oyu Tolgoi project would mark a pivot in strategy.
