(Reuters) - Rio Tinto took a big step toward owning a massive copper and gold project in Mongolia and diversifying from iron ore, after agreeing to buy more shares in developer Ivanhoe Mines Ltd and guaranteeing $3.3 billion needed to open the mine.

David Fuller's view I have been critical of Rio Tinto's management since it bought Alcan near top of the market in 2007 and then looked for a bailout from the Chinese state mining giant Chinalco in 2009, fortunately blocked by shareholders.


However, Rio has played a patient game in dealing with Ivanhoe and the Mongolian government over the enormously promising Oyu Tolgoi project. Provided there are no political problems following Mongolia's national elections in June 2012, development of this green site venture should continue, probably at faster pace.

Rio is best known for its fabulous reserves of iron ore in Australia. It is a major force in aluminium due to the Alcan takeover and should now become a significant producer of copper and also gold within the decade. The expenses come first with new mining ventures but I think Rio is cheap at an estimated PER of 7.7, according to Bloomberg.

This article from Seeking Alpha is highly informative on the Oyu Tolgoi project, just scroll down to 'Valuation' and 'Politics'.