CEO of Rio Tinto makes clear that offer is final for giant copper mine

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(Bloomberg) — Rio Tinto Plc CEO Jakob Stausholm made it clear on Tuesday that his offer is final to acquire a company behind one of the world’s largest copper mines.

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During an interview at the Bloomberg News headquarters in New York, Stausholm said the world’s second-largest miner has made a full offer to acquire full ownership of Turquoise Hill Resources Ltd. Rio will stop making offers if it is turned down by minority shareholders, despite criticism from a top investor who said the offer had undervalued the project. The comments come weeks after Rio agreed to buy the 49% stake in Turquoise Hill it doesn’t already own in a deal worth about $3.3 billion.

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“I don’t know what individual shareholders want to achieve, but I honestly believe we have offered a very full price,” Stausholm said. “Basically, I believe we have given shareholders a choice.”

The mine under discussion is Oyu Tolgoi, which is expected to become the fourth largest copper mine in the world, is a joint venture between Turquoise Hill and the government of Mongolia. Pentwater Capital Management argued two weeks ago that Rio Turquoise Hill’s price offering was undervalued, as there is a high probability that copper price will exceed $4 per pound in the coming decades amid growing demand for the metal to drive the energy transition. Pentwater bought 2.5 million shares of Turquoise Hill last week, bringing its stake to nearly 14%.

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Stausholm said about $3.6 billion will need to be refinanced over the next 2-1/2 years, which will need to be funded proportionally by Rio and Turquoise Hill, leaving minority shareholders on the hook if they don’t approve the deal. More than half of the remaining shareholders must approve the acquisition for the deal to go through.

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