Robert Friedland forced out as Rio tightens grip on Ivanhoe Mines
Rio Tinto announced in London on Wednesday night that it had provided Mr Friedland’s Ivanhoe Mines with a comprehensive financing package to support the massive Oyu Tolgoi mining project in Mongolia and in turn, Ivanhoe had agreed to sweeping board and management changes.
“Since 2006, Rio Tinto has provided funding of $US3.5 billion ($3.3bn) to Ivanhoe for the development of Oyu Tolgoi,” Rio copper chief executive Andrew Harding said.
“The agreement provides future financial certainty for Ivanhoe and stability for the timely development of Oyu Tolgoi. We will also undertake a strategic review of Ivanhoe’s assets with a view to maximising value for all Ivanhoe shareholders.”
Rio, which moved to 51 per cent control of Ivanhoe in January, has built its stake in Ivanhoe by funding development of the project’s first stage, but it has been unable to get a direct stake in the Gobi desert mine.
Rio stepped up its campaign to win control of the massive project in January when the miner became free to increase its stake in Ivanhoe after the Canadian company announced it was killing off a “poison pill” scheme meant to stop Rio from increasing its stake. This followed a ruling by an arbitrator in December against Ivanhoe’s shareholder rights plan.
Mr Friedland has since struggled to source an attractive financing package to complete development of the project. It is understood the company was basically out of options and only had Rio offering a suitable lifeline.
The board overhaul has sparked a change at its subsidiary, Ivanhoe Australia. The ASX-listed company, in which Ivanhoe Mines has a 59 per cent stake, announced yesterday that climate change sceptic Ian Plimer, who has been a director of the company since 2007, had replaced Mr Friedland as chairman.
Ivanhoe Australia chief executive Peter Reeve said while it would be business as usual for the miner, he didn’t know what Rio’s future plans would be. The miner has said it will review all of Ivanhoe’s assets and the market expects it to only keep Oyu Tolgoi and divest the rest.
“We have to work together with Rio and see what they want to do in the future . . . longer term. Do Rio want to be a holder of this 59 per cent? We would say they have bigger fish to fry.”
Mr Reeve added that the “very clear” message from Rio was there was no rush to do anything with the Australian assets.
He said it was sad to see Mr Friedland step down.
“Robert and I sat here and founded Ivanhoe Australia together and we have been working together,” he said.
“He not only has done a lot for the Ivanhoe group, he has done a hell of a lot for changing the tone of resources around the world and making sure people pick up the drill bit and look for metals, because if you don’t have people doing that, the world is going to run out of metals.”
The financing package will see Rio provide Ivanhoe another $US1.5bn, on top of the $US1.8bn of interim funding it provided in 2010, while looking to arrange a permanent $US3bn to $US4bn project financing facility.
http://www.theaustralian.com.au/business/mining-energy/robert-friedland-forced-out-as-rio-tightens-grip-on-ivanhoe-mines/story-e6frg9dx-1226333763623
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