The activist fund Palliser Capital has urged Rio Tinto $RIO (-1,08%)
$RIO (+0,6%) to submit a counter offer for Teck Resources, according to Reuters on Monday. Teck Resources had recently announced the terms of a no-premium merger with Anglo American.
Palliser also said Rio Tinto should unify its dual listing and spin off its base metals business to create a leading copper group.
In a letter to the board dated October 17, Rio shareholder Palliser urged the company to challenge Teck's agreed merger with Anglo American in order to gain control of a world-class copper portfolio that could produce 1.3 million tons annually.
Palliser - with Rio shares worth around $400 million (less than one percent) - confirmed the authenticity of the letter but declined to comment further, according to Reuters.
The letter argues that the merger would diversify Rio Tinto beyond iron ore, unlock cost synergies of at least $800 million and accelerate copper growth by a decade, with less risk than greenfield expansions. This would better position the Group for the global energy transition.
Rio Tinto told Reuters it remained focused on "maximizing value for shareholders" and would provide a strategy update at its capital markets day in five weeks' time. The company said the arguments regarding the dual listing had been discussed at length and rejected by shareholders.
Under Palliser's plan, Rio Tinto - currently listed in London and Sydney - would first become an Australian holding company before splitting into two companies: one focused on copper, aluminum and zinc in Canada, the other on iron ore in Australia.
"Combination is not optional - it is a prerequisite for any credible strategic combination," says the letter, which calls for swift action before the Anglo Tinto and Teck merger is finalized.
Anglo Tinto and Rio Tinto shareholders are due to vote on their merger plan on December 9.
