Rio Tinto is facing a new front in an escalating dispute over how to finance its biggest project after a US hedge fund threatened the miner with legal action.
Pentwater Capital Management, which has a large minority stake in Rio-controlled Turquoise Hill Resources, said it was prepared to file an “oppression” order unless the company allowed the subsidiary to take on more debt to fund the $6.8bn underground expansion of the Oyu Tolgoi mine in Mongolia’s Gobi Desert.
“We do not undertake this lightly, but enough is enough,” Pentwater chief executive Matthew Halbower said in an open letter sent on Monday to Rio’s board of directors.
“This mine is a jewel. It will be the third-largest gold and copper mine in the world. It will produce tens of billions of dollars of free cash flow for decades. Its owners should be treated as business partners, not as puppets or pawns.”
Pentwater’s warning came days after Odey Asset Management, a London-based hedge fund, also called on Rio to change the way it was funding the project.
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