Rio Tinto Group, the world’s third- biggest mining company, said it won’t seek full control of Mongolian project partner Ivanhoe Mines Ltd. after an arbitrator ruled in its favor in a shareholding dispute.
Rio said today it may seek to boost its Ivanhoe stake to a “majority position” after the expiry of a Jan. 18 deadline, without any plans for a full takeover bid. Ivanhoe, 49 percent owned by London-based Rio, slumped as much as 17 percent in Toronto trading.
Ivanhoe may now rush to lure rival bidders for the 51 percent of the company not owned by Rio before the bar on Rio buying shares in the market expires, Macquarie Group Ltd. said. At stake is control of one of the world’s largest untapped copper and gold deposits in Mongolia that Rio estimates will cost about $6 billion to build and has been forecast to make up one-third of Mongolia’s economy by 2020.
“We believe Ivanhoe will rapidly seek to maximize competitive tension in terms of potential bids for the remaining 51 percent,” Lee Bowers, a Macquarie analyst based in Sydney, wrote in a report today. “Whether there is a credible bidder ready to move on such a time-frame at a sufficiently definitive price is the key question.’
Ivanhoe fell 22 percent to C$16.56 in Toronto, the biggest decline since October 2008. Rio advanced 2.1 percent to 3,185 pence in London.