Activist investor slams Rio Tinto over Turquoise Hill CEO's exit

Pentwater Capital Management LP called out Turquoise Hill Resources Ltd. and Rio Tinto for allegedly breaching their fiduciary obligations following the exit of Ulf Quellmann as CEO of Turquoise Hill.

Pentwater is Turquoise Hill's top minority shareholder with a 9.28% stake. Rio Tinto owns 50.79% of Turquoise Hill, which holds a 66% stake in the giant Oyu Tolgoi copper-gold mine in Mongolia.

Pentwater said March 5 that Rio Tinto pushed for new leadership at Turquoise Hill after Quellmann took some actions to protect the interests of minority shareholders from the mining major's allegedly unethical practices.

Pentwater said Turquoise Hill directors who refuse to protect minority investors must be held accountable.

In November 2020, Turquoise Hill launched arbitration proceedings against Rio Tinto over funding disputes for the project, after the Canadian miner considered Rio Tinto's approach to project financing incompatible with Turquoise Hill's strategy.

In December 2020, Turquoise Hill supported the Mongolian government's call for an independent review of the cost blowouts at the mine's underground expansion.

Rio Tinto and the Mongolian government recently agreed to replace a 2015 agreement with a deal offering better benefits for the country.