TORONTO – A large proportion of the minority shareholders in Rio Tinto Plc-controlled Turquoise Hill Resources voted against the re-election of the company's independent directors on Tuesday.
While all seven directors were re-elected to the board, according to a Turquoise Hill filing, over 40% of Turquoise Hill's minority shareholders, including its second-biggest investor, Sailingstone Capital Partners, voted against the four independent directors.
Sailingstone last month flagged its vote in an open letter, citing governance issues and the board's lack of engagement with minority investors.
Turquoise Hill owns 66% of the Oyu Tolgoi copper mine in Mongolia, which is operated by Rio Tinto and expected to become one of the mining giant's most lucrative properties. But it has been plagued by political challenges, corruption investigations and construction delays.
Sailingstone has been engaged in a tussle with Turquoise Hill for years to improve corporate governance and alluded to the "woeful performance" of the company's stock in its April letter.
The San Francisco-based investment advisory firm, which owns 10.9% of Turquoise Hill, also blames mismanagement by Rio Tinto for delays to the completion of the main shaft at Oyu Tolgoi, which has led to delays to the start of production from its underground mine.
Turquoise Hill shares have lost 58% over the past five years, compared with a 9% decline in the S&P/TSX Global Mining index. The shares fell 0.8% to C$1.77 on Tuesday afternoon, versus the benchmark's 0.9% gain.
While Turquoise Hill's four independent directors won re-election with between 75% and 76% of total votes on Tuesday, between 40% and 48% of minority shareholder votes were not in their favor.