Rio Tinto has launched a $US2.7 billion ($3.7 billion) bid to assume full ownership of the Canadian company that owns 66 per cent of the giant Oyu Tolgoi copper project in Mongolia.

The Anglo Australian miner has offered $C34 a share to buy out the 49 per cent of Turquoise Hill that it does not already own, offering a 32 per cent premium to the last closing price on the Toronto Stock Exchange.

Rio Tinto chief executive Jakob Stausholm said the company strongly believed in the long-term future of the mine.

“That is why we want to increase our interest in Oyu Tolgoi, simplify the ownership structure, and further strengthen Rio Tinto’s copper portfolio,” he said.

Mr Stausholm said a successful transaction would provide a more efficient corporate structure and allow Rio Tinto to directly deal with the Mongolian government, which owns 34 per cent of the project.

No agreement has been reached between Rio Tinto and Turquoise Hill.

The bid comes just weeks after Rio Tinto and Turquoise Hill cancelled $US2.4 billion ($3.3 billion) in debt owed by the Mongolian government to settle years of disputes and delays that have plagued the mining giant’s plans to enlarge the Oyu Tolgoi copper project.

The two companies described the deal as a “reset” of their relationship with the host nation by increasing the financial benefits staying in the developing nation. The agreement allowed underground mining operations to commence on a $US6.9 billion expansion.

In its announcement to the market after close, Rio Tinto said should Turquoise Hill investors not accept its offer “Rio Tinto welcomes their continued investment and equal share of future risks and funding obligations.”