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Business deals

Rio Tinto offers $2.7bn to buy rest of Turquoise Hill stake

Deal settles dispute over copper-gold mine in Mongolia, one of world's largest

Rio Tinto is planning to ramp up the Oyu Tolgoi copper-gold mining project in Mongolia.

LONDON (Reuters) -- Rio Tinto on Monday proposed to buy the 49% of Canada's Turquoise Hill it does not already own for about $2.7 billion, as the Anglo-Australian miner looks to ramp up the Oyu Tolgoi copper-gold mining project in Mongolia.

The non-binding, C$34 per share offer represents a more than 32% premium to Turquoise Hill's close on Friday, and follows Rio Tinto's settlement with the Mongolian government in January of a long-running dispute over the $6.93 billion expansion of the Oyu Tolgoi project. 

"(The transaction) would simplify the Oyu Tolgoi ownership structure, strengthen Rio Tinto's copper portfolio, and reinforce its long-term commitment to Mongolia," the company said in a release.

"In addition, the Proposed Transaction provides Turquoise Hill minority shareholders with the ability to realise compelling, immediate and certain value for their shares," it also said.

Rio controls and operates the Oyu Tolgoi mine -- which is 550 km (342 miles) south of Mongolia's capital Ulaanbaatar and is one of the world's largest known copper and gold deposits -- via Turquoise Hill's 66% stake. The government of Mongolia owns 34%.

Turquoise Hill and Rio had disagreed over funding for the expansion project before reaching a deal in April. 

In October, Rio delayed first production at the underground development of Oyu Tolgoi by three months to January 2023, after Turquoise Hill estimated additional funding required for the project had ballooned to $3.6 billion.

A flurry of problems have separated the parties over the years, drawing the attention of minority shareholders.

U.S. activist investor Pentwater Capital, which has a 9% stake in Turquoise Hill, last year filed a class action in New York against Rio Tinto for damages, alleging it concealed the project's problems from investors for months.

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