Rio Tinto grabs 15pc of mineral sands upstart
Rio Tinto’s acquisitive mood shows no signs of relenting, with the multinational miner buying a strategic stake in mineral sands producer Sovereign Metals.
Rio effectively valued Sovereign’s African rutile and graphite project at $270 million on Monday when it agreed to pay $40.4 million for 15 per cent of the ASX-listed junior.
Rio Tinto boss Jakob Stausholm wants the miner to get more exposure to battery minerals.
The acquisition sparked a 7 per cent rally in Sovereign shares to a three-month high of 53¢ on Monday.
The company had a market capitalisation of $247 million at Monday’s close of trading, suggesting the stock continues to trade at a discount to the valuation implied by Rio’s acquisition.
Rio was also given options which, if exercised, could take its stake in Sovereign to 19.99 per cent within a year and Rio will also have pre-emptive rights to acquire Sovereign and its projects should a third party make a bid.
Sovereign’s flagship asset is the Kasiya project in Malawi, which contains rutile and graphite.
It is understood Rio’s interest in Sovereign was more focused on its rutile potential; rutile is the most efficient pathway to producing titanium dioxide and Rio is already one of the world’s major producers of titanium dioxide.
Everything from paint to bathroom tiles to toothpaste contains titanium dioxide, which is valued for its colour and texture.
The commodity is expected to be in strong demand in decades ahead when the Chinese and Indian economies transition from infrastructure-led economies to more urbanised economies with a greater focus on creature comforts.
But Rio will also help Sovereign to introduce its graphite to customers; the two companies hope to turn Kasiya’s flake graphite into the
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