New setback for Rio Tinto at Oyu Tolgoi copper mine in Mongolia

November 19, 2019

Rio Tinto, the world’s second-largest miner, is facing new legal setbacks at its Oyu Tolgoi underground copper mine in Mongolia. According to the Financial Times, an administrative court has backed a nongovernmental organization named Darkhan Mongol Nogoon Negdel that advocates for ecological balance and economic independence—and its claim that the government did not follow due process when it signed the agreement in 2015 for underground expansion. This deal, dubbed the “Dubai Agreement,” was negotiated by Rio Tinto’s Chief Executive Jean-Sebastien Jacques and then-Mongolian prime minister, Saikhanbileg Chimed.

A statement from Rio Tinto (via Mining.com) read, “We strongly refute any suggestion that the underground development and financing plan or any of the foundation Oyu Tolgoi agreements are illegal.”

The $5.3 billion copper project and expansion in the Gobi Desert is crucial for the Mongolian economy. Not only is it the country’s greatest source of foreign direct investment, but it also provides thousands of well-paying jobs.

With the project running over budget and behind schedule, it has become a political football in Mongolia’s complex political system, with members of parliament using it to advance their own agendas and interests. In July, Rio Tinto warned that the project would take 16-30 months longer than expected and cost an additional $1.9 billion than the original $5.3 billion investment, the Financial Times reported.

One-third of the massive mine is owned by Mongolia’s government and the remaining two-thirds is held by Canada’s Turquoise Hill Resources. Of Turquoise’s 66 percent share, Rio Tinto owns 51 percent in the project. The court’s formal written ruling is expected to be released in the coming weeks.

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