Mongolia urges Rio Tinto to rewrite copper mine terms
Mongolia is trying to renegotiate “unfair” trading terms for mining giant Rio Tinto’s US$18 billion ($25 billion) Oyu Tolgoi copper mine, the Financial Times reports.
Mongolian Prime Minister Gombojavyn Zandanshatar warned the British-Australian multinational at a meeting on Monday that the current deal is unfair, adding that “this whole situation feels like the Mongolian people and parliament are being deceived,” the newspaper said, citing video it saw on Monday.
A Rio Tinto spokesman told Reuters the company was in active negotiations with the Mongolian government, adding that the talks reflected their ongoing commitment to work together to achieve Oyu Tolgoi’s full potential for the benefit of all partners.
Zandanshatar and other government officials will meet with Rio executives, including copper chief Katie Jackson, this week to discuss the terms of the deal, the report said.
Mongolia owns 34 percent of Oyu Tolgoi, one of the world’s largest known copper and gold deposits, while Rio has a 66 percent share.
The facility is Rio’s largest copper cultivation project and began open-pit mining in 2011.
The FT said Mongolia received a multibillion-dollar loan from Rio Tinto at a variable interest rate of more than 11 percent to finance its share of the capital expenditure needed to develop the mine.
The report said the government suggested Rio reduce the interest rate on the loan to below six percent and reduce the annual management fee it demands for the project. The report also stated that Rio would face the risk of an increase in export taxes if negotiations between the parties go badly.
Reuters could not immediately confirm the report.
Rio Tinto did not immediately respond to a request for comment.
According to its website, Oyu Tolgoi is expected to produce 500,000 tonnes of copper per year at its peak production.
In 2022, Rio agreed to waive the $2.4 billion debt the government owed it regarding Oyu Tolgoi, and both parties agreed to “reset” their relationship.
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