Rio Tinto PLC said on Monday it was proposing to acquire the entire remaining share capital of Turquoise Hill Resources Ltd, the partial owner of a massive copper mine in Mongolia.

The Anglo-Australian miner has made a $2.7 billion non-binding all-cash proposal for the remaining 49% of Toronto- and New York-listed Turquoise Hill, who owns 66% of the Oyu Tolgoi copper mine in Mongolia. Rio Tinto currently holds a majority stake in the company, with 50.8% of its issued capital, and manages operations at the mine. The remainder of the copper mine is owned by the Mongolian government.

Under the proposal, minority shareholders of Turquoise Hill would receive C$34 cash per share, which is a premium of 32% to its last closing price on the Toronto Stock Exchange, said Rio.

Shares in Rio Tinto were down 3.6% to 5,365.00 pence each in London on Monday morning.

‘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,’ said Rio Chief Executive Jakob Stausholm.

Rio said the deal would also strengthen its copper portfolio, and reinforce its long-term commitment to Mongolia.

Rio said no agreement has been reached between the parties, and there is no guarantee a transaction will occur following the discussions. ‘Should Turquoise Hill investors not accept the proposed transaction, Rio Tinto welcomes their continued investment and equal share of future risks and funding obligations,’ the company said.

This follows a ‘relationship reset’ in late January, where Rio, Turquoise Hill and the Mongolian government agreed to the start of underground mining operations at Oyu Tolgoi. At that time, Rio had said it would ‘consider’ buying all the shares of Turquoise Hill, if market conditions, tax rules and ‘other factors’ were aligned.

The Oyu Tolgoi mine is expected to produce around 500,000 tonnes of copper annually on average from 2028 to 2036, and is likely to become the fourth largest copper mine in the world by 2030. It produced 163,000 tonnes of copper in 2021 from its open pit.

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