Rio Tinto faces threat of legal action from investor in Mongolian project
MELBOURNE – Rio Tinto said on Tuesday that it would not offer any comment in response to a threat of legal action from the largest minority shareholder in its Mongolian copper project Oyu Tolgoi.
Rio Tinto operates what is slated to become the world's third-largest copper mine which is jointly owned by the Mongolian government and Canada's Turquoise Hill Resources, in which Rio owns a 50.8% stake.
Activist investor Pentwater Capital Management holds a 9.23% stake in Turquoise Hill and is its largest minority investor.
In a letter to the Australian exchange on Monday, Pentwater CEO Matthew C. Halbower accused Rio of mismanaging costs, and then unfairly restricting Turquoise Hill's ability to obtain finance to pay for those costs.
Rio Tinto declined to comment.
"It is unacceptable that Rio ... is preventing TRQ from seeking the financing solutions that are most optimal for TRQ shareholders," Halbower said.
"If Rio’s Board continues with this oppressive behaviour ... Pentwater is prepared to go forward with legal action against the proper parties, including, you, the Board of Directors."
Rio in 2019 announced a cost overrun at the project of up to $1.9-billion due to difficult geology, saying total capital expenditure was expected to be in a range of $6.5-billion to $7.2-billion, and it expected a delay of up to 30 months at the mine's underground extension.
In September, it said it planned to raise up to $500 million through additional lending to develop the mine.
However shareholders worried that a rights issue would allow Rio Tinto to take a greater stake in Turquise Hill that underplayed its full valuation.
More advantageous financing operations included streaming and bond financing, said Halbower who also noted that he stood for a board role but said that was vetoed by Rio.
Comments
Press Office
Announcements
What's On
Subscribe to improve your user experience...
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation