SouthGobi Resources (PK) (USOTC:SGQRF)
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From Jun 2019 to Jun 2024

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