Rio Tinto Will Review Ivanhoe's SouthGobi Stake Sale
19 April 2012 - 11:14PM
Dow Jones News
Rio Tinto PLC (RIO) said it will review Ivanhoe Mines Ltd.'s
(IVN.T) sale of a stake 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, however, underscored 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.
Albanese told Rio Tinto's shareholders at the company's annual
general meeting that the deal was announced prior to Wednesday when
Rio managed to further strengthen its control over the company by
appointing more members to Ivanhoe's board.
"We are going to review that situation now that we are the new
management of Ivanhoe," Albanese said. He however noted 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.
-By Alex MacDonald, Dow Jones Newswires; +44 (0)20 7842 9328;
alex.macdonald@dowjones.com