Turquoise Hill Resources (NYSE:TRQ)
After a slow start to the day, shares of Turquoise Hill Resources (NYSE:TRQ) have exploded higher, up 24.9% as of 10:20 AM ET. The Canadian copper miner has received an even larger acquisition offer than the one it rejected not long ago, and this has caused a stir in financial markets.
What’s the Reason?
Since March, when it originally proposed to acquire a 49% stake in the miner for 34 Canadian dollars (approximately $26.57) per share, mining giant Rio Tinto (RIO -3.19%) has been pursuing Turquoise Hill Resources (NYSE:TRQ). The deal is valued at $2.7 billion.
A representative from Turquoise Hill Resources (NYSE:TRQ) stated that the company would not accept the offer since the price did not represent the “full and fair value” of the miner.
This morning, Rio Tinto upped the ante, offering CA$40 a share for Turquoise Hill’s stock for about $3.1 billion. Canadian miner stock jumped on the news of Rio Tinto’s improved offer.
Contrarily, as of this writing, Rio Tinto stock had fallen by around 3.5 percent on Wednesday.
Turquoise Hill is already owned by Rio Tinto in a majority capacity. After a lengthy debate, the government of Mongolia has finally given Rio Tinto permission to begin mining at Oyu Tolgoi, one of the world’s largest copper and gold resources. The government owns a third of the mine, with the rest held by Turquoise Hill.
What Next?
Once underground mining operations begin at Oyu Tolgoi, Rio Tinto predicts the mine will be one of the world’s top five copper producers. The average annual copper output from Oyu Tolgoi is projected to reach 500,000 tonnes from 2028 to 2036. That is the amount of copper mined at Freeport McMoRan’s Cerro Verde mine in Peru, the world’s fifth-largest.
The urgency with which Rio Tinto wants to purchase Oyu Tolgoi is understandable. Because copper is in such high demand, Oyu Tolgoi will further bolster the mining giant’s presence in the sector. Demand from significant-end sectors, such as electric vehicles and renewable energy (wind and solar), drove copper prices to record highs in March. According to S&P Global, copper consumption will almost quadruple by 2035.
Featured Image: Megapixl @Piter2121
Author Shariq Khan 
