Rio Tinto To Review Next Steps On Ivanhoe’s SouthGobi Stake Sale

Rio Tinto PLC (RIO, RIO.LN) said it will review the next steps regarding Ivanhoe Mines Ltd.’s (IVN.T) stake sale in SoutGobi Resources Ltd (SGQ.T) to Chalco now that it has control of Ivanhoe’s board.

Rio Tinto’s CEO Tom Albanese, speaking at the annual general meeting, reaffirmed that the transaction is commercially competitive and doesn’t run against Rio’s primary investment objective in Ivanhoe, which is to develop Mongolia’s massive gold and copper Oyu Tolgoi project.

Earlier this month, Aluminum Corp. of China Ltd.’s (2600.HK), or Chalco,–China’s biggest aluminum producer by output–agreed to buy up to a 60% stake in SouthGobi for more than $900 million to diversify into resource-rich Mongolia. Ivanhoe owns 57.6% of SouthGobi.

The deal is currently being reviewed by the Mongolian government on national-security grounds and has prompted the government to move to suspend some of the company’s licenses, SouthGobi said earlier this week.

SouthGobi’s main asset is the Ovoot Tolgoi Mine in Mongolia, which produces coal used in steel and power production.

“We are going to seek to understand the Government’s position now that we are the new management of Ivanhoe,” Albanese said. He however underscored that: “This was a commercial competitive transaction. It was the highest offer.”

Rio Tinto owns a 51% stake in Ivanhoe, which in turn owns a 66% stake in the Oyu Tolgoi project.

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