Turquoise Hill Resources

Turquoise Hill Resources

Company type	Subsidiary
Industry	Mineral exploration and development
Predecessor	Ivanhoe Mines
Founder	Robert Friedland (implied, not explicitly stated as founder)
Fate	Acquired by Rio Tinto Group
Headquarters	Montreal , Canada
Area served	Mongolia, Australia, Kazakhstan, China, Indonesia, Philippines
Key people	Ulf Quellmann (CEO as of 2018), Jean Chrétien (special advisor)
Products	Copper, gold, uranium, molybdenum, rhenium, silver, lead, zinc, coal
Owner	Rio Tinto Group (100% since December 2022)
Number of employees	14,000 (at Oyu Tolgoi project in 2011)
Parent	Rio Tinto Group

Turquoise Hill Resources was a Canadian company specializing in mineral exploration and development, with its headquarters located in Montreal, Quebec. Since December 2022, it has operated as a fully owned subsidiary of Rio Tinto Group. Previously known as Ivanhoe Mines until August 2, 2012, the company adopted its current name following a financing agreement with Rio Tinto. Rio Tinto completed the acquisition of Turquoise Hill by obtaining full ownership in December 2022.

The company's main asset is a 66% ownership interest in the Oyu Tolgoi Copper-Gold Mine situated in Southern Mongolia, approximately 200 km east of Dalanzadgad. The Oyu Tolgoi deposit ranks among the largest copper and gold porphyry deposits worldwide. Its development hinged on an agreement that granted the Mongolian government a 34% stake and included royalty provisions that led to considerable delays.

In Australia, Turquoise Hill holds interests in mines producing various metals including gold, uranium, copper, molybdenum, and rhenium. The company also manages several gold and copper projects within Mongolia and possesses a 50% share in Kazakhstan’s Kyzyl gold project via Altynalmas Gold. Exploration activities extend across China, Indonesia, and the Philippines. Additionally, Turquoise Hill owns a 14% stake in Entree Gold, which operates copper and gold projects in southern Mongolia and Arizona, as well as a 14% interest in Exco Resources, an operator of copper and gold mines in Australia.

Rio Tinto stands as the largest shareholder, holding 50.8% of Turquoise Hill’s shares—a rise from 46.5% after acquiring $502 million worth of additional shares in June 2011. Since 2006, Rio Tinto has invested approximately $3.5 billion into the company. Former Canadian Prime Minister Jean Chrétien acts as a special advisor to Turquoise Hill.

Exploration at Oyu Tolgoi’s Heruga North deposit in September 2010 revealed greater reserves of gold and copper than initially anticipated, resulting in a 6% increase in share value. The capital expenditure for the project was forecasted to surpass $5 billion. To finance ongoing development, Ivanhoe announced a $1 billion share offering in October 2010. Due to new funding efforts by Ivanhoe Australia related to North Queensland assets, Ivanhoe Mines’ ownership there declined from 81% to 62%. By March 2011, construction at Oyu Tolgoi had progressed to 15%, reaching 73% completion by February 2012.

In 2016, Turquoise Hill produced 201,300 tonnes of copper and 300,000 ounces of gold, exceeding production targets and generating revenues of US$1.2 billion. The company reported net income attributable to owners from continuing operations amounting to $210.6 million.

History

2000 - In December, ABM Mining (a private company) merged into Ivanhoe Mines. At that time, Ivanhoe's primary assets included a 50% interest in Myanmar's Monywa Copper Project with an annual output of 28,500 tonnes. Total combined production for the year was 13,350 tonnes of copper, 2 million tonnes of iron ore pellets, and 48,000 tonnes of iron ore concentrate. ABM Mining had been established in 1997 and remained privately held until this merger.

2002 - The subsidiary ABM Mining acquired all outstanding debts associated with Tasmania’s Savage River iron ore project in Australia, securing priority claims on its assets.

2005 - As part of a strategic refocus on the Oyu Tolgoi project—particularly the Hugo deposit—Ivanhoe sold the Savage River Project to Stemcor Holdings Limited for up to US$170 million.

2007 - In May, Ivanhoe divested all coal-related projects including Ovoot Tolgoi to Asia Gold Corp (currently SouthGobi). This transaction involved Asia Gold issuing over 80 million shares to Ivanhoe Mines, increasing Ivanhoe’s stake from 45% to majority ownership. In October, Rio Tinto arranged access to a $350 million credit facility dedicated to advancing Oyu Tolgoi’s development.

2008 - In January, Ivanhoe raised $117.9 million through private placements that increased its SouthGobi interest by converting preferred shares into common shares. The Heruga Deposit at Oyu Tolgoi was officially declared to contain substantial copper, gold, and molybdenum resources. Mongolian authorities approved the Ovoot Tolgoi project in April enabling production commencement at the Sunset Field. In May, Ivanhoe disposed of its majority stake in Jinshan Gold Mines for C$216.7 million. That summer saw Ivanhoe Australia complete an ASX IPO raising A$125 million while retaining an 80% ownership; concurrently Rio Tinto supported Oyu Tolgoi with equipment procurement.

2009 - Ivanhoe finalized agreements with Mongolia concerning Oyu Tolgoi’s ownership structure, taxation terms, environmental obligations, and local employment requirements. In October, Rio Tinto acquired an additional 46.3 million common shares for $388 million. In November China Investment Corporation invested US$500 million into SouthGobi through a convertible debenture.

2010 - SouthGobi raised C$459 million via a Hong Kong Stock Exchange IPO in January. By March $250 million of China Investment Corporation’s debenture converted into SouthGobi common shares reducing Ivanhoe's holding to 57%. Rio Tinto agreed not to attempt a takeover of Ivanhoe before October 2011 limiting its stake to 46.65%.

2012 - In April Ivanhoe sold its entire 57.6% interest in SouthGobi Resources to Chalco for $889 million following pressure from majority shareholder Rio Tinto to divest non-core assets; however Mongolian authorities suspended operations at Ovoot Tolgoi mine shortly thereafter. On July 31 Rio Tinto purchased $935 million worth of Ivanhoe shares increasing its ownership to 51%. This capital injection necessitated rebranding Ivanhoe Mines as Turquoise Hill Resources and led to founder Robert Friedland resigning as CEO; six senior board members also stepped down except former CEO John Maken who assumed the role of company president.

2013 – In June Turquoise Hill Resources secured a $225-million non-revolving bridge loan from majority shareholder Rio Tinto.

Coal

The Nariin Sukhait site, also known as Ovoot Tolgoi and Ivanhoe's primary coal operation, contains reserves totaling 114.1 million tonnes and is currently active in production. Additional ventures include the Soumber Deposit, which holds 55.5 million tonnes in reserves, along with the Ovoot Tolgoi Underground Deposit. On April 2, 2012, Ivanhoe divested its coal interests by selling its 57.6% ownership in SouthGobi Resources Inc to Chalco for $889 million.

Molybdenum, Silver, Rhenium, Uranium, Lead, Zinc

In 2003, Ivanhoe expanded its portfolio by acquiring mining assets in Mount Isa and Cloncurry. The Merlin mine stands out for possessing the world’s richest molybdenum-rhenium concentration. Another notable property is the Tennant Creek project. Furthermore, Ivanhoe purchased Barrick Gold’s Osborne asset near Merlin, which includes an ore processing facility; this acquisition involved an $18 million investment.

Copper, Gold

Oyu Tolgoi features measured and indicated reserves of at least 36.3 billion pounds of copper alongside 20.2 million ounces of gold, with ongoing exploration potentially increasing these estimates. Recognized as the globe’s largest gold mine and third-largest copper mine, Oyu Tolgoi requires a remaining capital injection of $4.6 billion to complete construction by 2012. The anticipated annual output is approximately 544,000 tonnes of copper and 650,000 ounces of gold.

Kyzyl Gold Project

Situated in Northern Kazakhstan, this project has undergone an independent pre-feasibility assessment by UK-based Scott Wilson Ltd., estimating reserves at 3.3 million ounces with an operational lifespan of ten years.

Oyu Tolgoi

Discovered by Ivanhoe Mines in 2001, the Oyu Tolgoi site is rich in copper and gold and is being developed through both open-pit and underground mining methods. Located about 80 kilometers north of the China-Mongolia border, it benefits from close proximity to China—the largest commodities futures market worldwide. By September 2010, reserve estimates stood at 81.3 billion pounds of copper and 46.4 million ounces of gold. Construction progress reached 15% by March 2011—surpassing schedule—with production expected to commence in 2013 and reach full scale by 2018. In 2011, the project employed roughly 14,000 personnel. By February 2012, construction completion had advanced to 73%.

Relationship with Rio Tinto

Rio Tinto has pursued increasing its shareholding in Ivanhoe Mines from 35% to 46.6%, with intentions toward a full acquisition. Ivanhoe has resisted these efforts by adopting a shareholder rights plan designed to block gradual takeovers. Despite the necessity to secure billions for project development financing, Ivanhoe remains optimistic about obtaining $2 billion from various financial institutions. On January 27, 2011, Ivanhoe raised $1.8 billion through a rights offering aimed at advancing development at the Oyu Tolgoi mine—of which it owns 66%. This resulted in founder Robert Friedland’s stake being reduced to 15.5%, while Rio Tinto retained a 40.5% interest. In February 2011, Rio Tinto increased its influence by appointing two executives to Ivanhoe’s board, bringing its representation to six out of fourteen seats. By June 2011, Rio Tinto invested an additional $502 million to raise its ownership by 4.5% (to a total of 46.5%) and secured seven board seats. Early in 2012, Rio Tinto achieved majority control with a stake of 51%. Following this shift in control, Friedland stepped down as CEO in April 2012. As of July 2018, Turquoise Hill Resources is led by CEO Ulf Quellmann, a finance executive affiliated with Rio Tinto.