Anti-corruption body asks Rio for Oyu Tolgoi-related info

Infomine

By Cecilia Jamasmie

Rio Tinto-controlled Turquoise Hill Resources said Tuesday it had received an “information” request from the Mongolian Anti-Corruption Authority (ACA) to provide financial information.

The petition relates to an investigation about possible abuse of power by authorized officials during negotiation of the 2009 Oyu Tolgoi investment agreement, the company said in a statement.

“There is no indication in the ACA information request to suggest that Oyu Tolgoi is a subject of the investigation,” it noted.

Request relates to an investigation about possible abuse of power by authorized officials during negotiation of the 2009 Oyu Tolgoi investment deal.

The request is the latest in a string of issues Rio Tinto has been facing in Mongolia in the last few months.

First, the country’s government served Oyu Tolgoi in January with a new bill for $155 million in back taxes —  the mine’s second tax dispute since 2014. Turquoise Hill said at the time the charge related to an audit on taxes imposed and paid by the mine operator between 2013 and 2015. It added it’s disputing the assessment.

Shortly after, the southern Gobi Desert-based mine had to declare force majeure after protests by Chinese coal haulers disrupted deliveries near the border.

Last month, the government reinstated a decade-old agreement ordering the company to source power for its Oyu Tolgoi mine domestically.

The move could raise the costs of an ongoing $5.3 billion underground expansion of its Oyu Tolgoi copper and gold mine in Mongolia, which is a strategic partnership between the country’s government (34%) and Turquoise Hill (66%), of which Rio Tinto owns 51%.

The company has four years to either find a domestic supplier or build a power plant, which could come with a bill as high as $1 billion. Such facility, however, would allow Rio to secure power for the mine from domestic rather than Chinese sources, as stipulated in the investment deal signed nine years ago.

Rio is also facing increasing pressure from shareholders about its alleged lack of transparency about pledges to the Mongolian government and escalating costs for the expansion. It has also been questioned about its treatment of minority shareholders at Turquoise Hill.

Oyu Tolgoi was discovered in 2001 and Rio gained control of it in 2012. The under execution underground expansion of Oyu Tolgoi is expected to lift production from 125–150kt this year to 560kt at full tilt from 2025, making it the biggest new copper mine to come on stream in several years.

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Source:: Infomine