UPDATE:Rio Tinto To Review Next Steps On Ivanhoe's SouthGobi Stake Sale
20 April 2012 - 5:05AM
Dow Jones News
Rio Tinto PLC (RIO, RIO.LN) said it will review the next steps
regarding Ivanhoe Mines Ltd.'s (IVN.T) stake sale 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, reaffirmed 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.
"We are going to seek to understand the Government's position
now that we are the new management of Ivanhoe," Albanese said. He
however underscored 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