Turquoise Hill Holders Endorse Rio Tinto $3.1 Billion Deal
Comment of the Day

December 10 2022

Commentary by Eoin Treacy

Turquoise Hill Holders Endorse Rio Tinto $3.1 Billion Deal

This article from Bloomberg may be of interest to subscribers. Here is a section:

Turquoise Hill Resources Ltd. shareholders endorsed a C$4.24 billion ($3.1 billion) takeover offer by Rio Tinto Group, paving the way for the London-based miner to gain control of one of the world’s largest copper mines.

About 60.5% of Turquoise Hill’s minority investors voted in favor of Rio’s C$43-a-share cash offer, the Canadian company said following a shareholders’ meeting in Montreal on Friday. The result clears the way for Rio Tinto to take over Turquoise Hill and gain majority ownership in its massive Oyu Tolgoi project in Mongolia, which is expected to become the world’s fourth-largest copper mine.

Shares of Turquoise Hill rose 0.9% to C$42.93 at 2:43 p.m. in Toronto. Rio shares closed almost 1% higher in London before the vote results were announced.

“This transaction will deliver significant benefits for all shareholders, and allow us to progress the Oyu Tolgoi project in partnership with the government of Mongolia with a simpler and more efficient governance and ownership structure,” Rio’s copper head Bold Baatar said in a statement/

Eoin Treacy's view

This acquisition is a testament to how rare new truly world-class copper mines are. The fact Mongolia is sandwiched between Russia and China is a handy geographical accident that means supply will be a buyer regardless of what else happens.

Copper is heavily influenced by what happens in the Chinese economy and its construction/infrastructure sectors. The price is currently testing the region of the 200-day MA. How well it can improve from here will be about as clear an indicator of the Chinese economy as we might wish for. That is particularly true as the reliability of Chinese COVID numbers will be less reliable as the testing regime winds down.

There are several long-term trends that support growth in copper demand. The challenge is in how well the property sector can recover in a timely manner to support demand.

Rio Tinto (Est P/E 8.06, DY 9.05%) continues to trade back up towards the upper side of a two-year range.

Back to top

You need to be logged in to comment.

New members registration