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19/06/2024
Mining News

Rio Tinto in Mongolia faces class action suit over Oyu Tolgoi copper project

Rio Tinto operates the mine via its Canadian subsidiary Turquoise Hill, which owns 66% of Oyu Tolgoi. The rest of the mine has been owned by the Mongolian government since the project was launched in 2009.

The largest minority shareholder in Rio Tinto’s Mongolian copper project Oyu Tolgoi has filed a class action lawsuit in New York, claiming the company concealed massive cost overruns and delays. Rio Tinto said that the lawsuit is without merit.

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Activist investor Pentwater Capital Management LP is Turquoise Hill’s largest shareholder after Rio with a 9% stake. In its class action complaint filed in the United States District Court for the Southern District of New York on March 16, Pentwater said that senior executives of Rio Tinto and Turquoise Hill “repeatedly assured investors that progress on that development was on plan and on budget and that the deadline for achieving sustainable first production when the mine would begin generating cash flows remained intact.”

“In reality… the underground expansion project was many months behind schedule and hundreds of millions of dollars over budget,” it said in the 160-page filing.

“Ultimately, Turquoise Hill investors incurred massive losses as Turquoise Hill shares lost well over 70% of their value when the true extent of the delays and cost overruns at Oyu Tolgoi came to light,” it added.

Turquoise Hill was not immediately available for comment. The lawsuit is seeking compensation for losses incurred by investors in Turquoise Hill.

The underground mine expansion has been severely delayed by a dispute over funding as the Mongolian government seeks a bigger portion of the profits, even as costs have ballooned due to difficult geology.

Rio in 2019 announced a cost overrun at the project of up to $1.9-billion, expecting total capital expenditure to be in a range of $6.5-billion to $7.2-billion. A year later, it said it would raise up to $500-million through additional lending to develop the mine, which is now expected to start production in 2022.

Source: miningweekly.com

 

 

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