Temasek has taken a 5.5 per cent stake in Ivanhoe Mines of Canada, making the Singapore state investment agency the latest investor to gain exposure to Mongolia as it expands its natural resources portfolio.
Temasek confirmed that it had submitted a filing to US regulators that it now owned 40.85m shares in Ivanhoe, which would be valued at about $425m, based on Monday’s closing share price.
Ivanhoe controls a 66 per cent stake in Mongolia’s massive Oyu Tolgoi mine with the country’s government holding the remainder. The mine, which is still under development, is expected to be one of the world’s biggest new sources of copper and gold, and is near Mongolia’s border with China, the world’s largest consumer of copper.
Ivanhoe is itself controlled by London-listed miner Rio Tinto, which in December won a battle for control of the Vancouver-based group after an independent arbitrator ruled against Ivanhoe’s efforts to prevent Rio from increasing its stake.
Mongolia, whose economy grew 17 per cent last year and which sits atop vast deposits of copper and coal, has become a leading destination for investment by global mining companies such as Rio Tinto, Peabody and Shenhua.
Legislation currently restricts foreign ownership of “strategic industries”, including mining, in deals worth more than $75m to 49 per cent unless approved by parliament. However, Tsakhia Elbegdorj, the country’s president, has said the government is willing to reopen negotiations after this month’s parliamentary elections.
According to Ivanhoe, independent estimates indicate that the Oyu Tolgoi field contains approximately 41bn pounds of copper and 21m ounces of gold in measured and indicated resources.
Construction on the first phase of the complex, which is expected to begin commercial production next year, was four-fifths complete by April with backers of the project estimated to have committed $4.6bn in capital investment so far.
Rio Tinto has estimated that the complex could add a third to Mongolia’s GDP, employ up to 13,000 people, and emerge as a top five copper producer once it reaches full production.
The mining group, which in January increased its holding in Ivanhoe to 51 per cent, agreed in April to underwrite a $1.8bn sale of equity by the Toronto-listed company in a deal which was seen as tightening Rio’s control of the Oyu Tolgoi project and clearing the way for an eventual takeover of Ivanhoe.
Temasek already owns a range of energy and natural resources assets and in April joined with RRJ Capital, a private equity group owned by Malaysian businessman Richard Ong, to buy a stake in Kunlun Energy, a PetroChina unit.
Last month, it teamed up with RRJ again to invest $468m in Houston-based liquefied natural gas company Cheniere Energy, which is set to become a large exporter of LNG from the US.
Temasek was one of four companies to have invested in May a total of $1.13bn in Venari Resources, an oil exploration company operating in the Gulf of Mexico. The others were Warburg Pincus, Kelso & Company and The Jordan Company.
In South Africa, Temasek has an investment through Canada-listed Platmin, in which it invested $100m in March. It also has an interest in , a Chilean miner.