Rio makes $2.7bn bid to take over Turquoise Hill

Rio Tinto Group has offered to buy out Turquoise Hill Resources Ltd. for $2.7 billion in attempt to gain control of a giant copper mine it’s developing in Mongolia.

The world’s second-biggest mining company currently owns 51% of Turquoise Hill, which in turn holds a two-thirds share in the giant Oyu Tolgoi copper project in Mongolia. Rio’s flagship growth project has been a headache for the company as costs spiral and it dealt with long running disputes with both the Mongolian government and Turquoise Hill.

Yet earlier this year Rio struck a deal with the Mongolian government to start work on a long-delayed $6.9 billion underground expansion of Oyu Tolgoi after agreeing to write off $2.4 billion owed by the state.

Rio said Monday it was offering C$34 ($26.60) a share to Turquoise Hill’s minority shareholders, a 32% premium to Friday’s closing price. Rio said no agreement has been reached between the company and Turquoise Hill.

Rio has had a troubled relationship with Turquoise Hill around how it will fund its share of the cost of developing the project.

“The proposed transaction 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,” Rio’s Chief Executive Jakob Stausholm said in a statement Monday.