Rio Tinto Becomes Majority Owner of Oyu Tolgoi

(REUTERS) -- Global miner Rio Tinto has raised its stake in Canada's Ivanhoe Mines, owner of Mongolia's massive Oyu Tolgoi copper-gold project, to a majority holding but said on Tuesday it had no current plans to buy more shares.

Rio, which has built its stake in Ivanhoe as it helped to fund construction of Oyu Tolgoi, raised its stake to 51 percent from 49 percent, buying 15.1 million Ivanhoe shares for around 300 million Canadian dollars ($298 million) from two sellers in a privately negotiated deal.

Rio had been widely expected to raise its stake after a standstill agreement expired last week and Ivanhoe said it had decided to scrap a poison pill originally aimed at capping Rio's stake at 49 percent.

Ivanhoe said last week Rio had already signalled it intended to buy more shares.

Rio Tinto's move to a majority stake in Ivanhoe further demonstrates our commitment to the safe and successful development of the Oyu Tolgoi mine, Rio Tinto's head of copper, Andrew Harding, said in a statement.

We are approaching a very important phase in the development of the Oyu Tolgoi mine, with 70 per cent of the construction now complete.

It has no current intention to purchase further securities in Ivanhoe, Rio Tinto said, but reserves the right to do so.

Rio, scarred by the costly takeover of aluminium giant Alcan at the height of the commodities boom, is not expected to move aggressively on Ivanhoe.

Instead, analysts say, it is expected to seek a friendly deal that would give it control of Oyu Tolgoi but leave behind Ivanhoe's other assorted stakes.

Ivanhoe owns 66 percent of Oyu Tolgoi but also stakes in coal miner South Gobi Resources, Ivanhoe Mine Australia and Kazakh project Kyzyl Gold.

Key to Rio's ambitions will be its ability to strike a deal with Ivanhoe founder and CEO Robert Friedland, one of the industry's best known entrepreneurs and toughest negotiators.

Oyu Tolgoi, which translates to Turquoise Hill, is located about 50 miles north of Mongolia's border with copper-hungry China and is considered one of the world's largest copper and gold deposits.

A spokesman for Ivanhoe Mines was not immediately available for comment.