Rio Tinto agrees new financial terms for $18bn copper mine project www.ft.com

Rio Tinto and Mongolia have agreed new financial terms for the $18bn Oyu Tolgoi copper mine, after surging prices for the metal and mounting political pressure pushed the company into talks.

The London-listed miner has agreed to cut its management fees for the project in the Gobi Desert by 50 per cent and to reduce the interest rate on its multibillion-dollar loan to Mongolia by 2.5 percentage points.

The agreement follows months of negotiation over Mongolia’s single biggest mining project and foreign investment, after officials described earlier terms as “unfair” and claimed the country was “being deceived”.

It also comes as copper prices are near record highs, potentially increasing the future payouts from the mine. It is expected to produce about 500,000 tonnes annually of the red metal, which is in high demand for its role in the energy transition.

Rio Tinto chair Dominic Barton and Katie Jackson, head of copper, met Mongolian Prime Minister Uchral Nyam-Osor on Tuesday in Ulan Bator to sign the deal.

The agreement showed that Mongolia could “protect our financial sovereignty while maintaining a highly lucrative environment for global capital”, the PM said in a statement.

Jackson said the agreement “demonstrates Rio Tinto’s ongoing commitment to the long-term success of Oyu Tolgoi”, adding that the reduced interest rate reflected the lower risk as the project matured. The Mongolian government declined to comment.

The new deal is the latest in many twists and turns for Oyu Tolgoi, which has been under construction for nearly 17 years.

Four years ago, Rio agreed to waive about $2.4bn of the government’s loan as both sides vowed to “reset” the relationship — but that truce has not held, while elections due next year have raised the political stakes.

Two weeks ago protesters successfully disrupted exports from Oyu Tolgoi, forcing it to halt shipments of concentrate leaving the project for nearly a day.  

One issue that has not been resolved is how soon the government will start receiving dividends from Oyu Tolgoi, in which it holds a 34 per cent stake, with Rio owning 66 per cent.

Frequent cost overruns and delays have pushed back the expected start date for dividends from 2017 to around 2037. Rio said it would “bring forward distributions to shareholders”, without committing to a date.  

Ben Davis, analyst at RBC, said the agreement was “just about a net positive” for Rio, though concerns remained about how long it would hold before the government seeks “to take a larger share of the economics”.

“Given how quickly Mongolia politics changes, this remains a very real risk,” he said in a note to clients.

Separately, the Anglo-Australian company is facing a tax probe in Mongolia, where authorities allege it has underpaid about $450mn largely because of accounting differences related to depreciation during the 2021 and 2022 tax years.

That dispute is working its way through the courts.

Rio Tinto's Oyu Tolgoi Reset: Mongolia Pushes for a Bigger Share of Its Mining Wealth www.capitalmarkets.mn

For nearly two decades, the relationship between Mongolia and Rio Tinto has defined the country's investment story. The 2009 Oyu Tolgoi Investment Agreement unlocked one of the world's largest copper-gold deposits and attracted billions of dollars in foreign capital, but it also became one of Mongolia's most politically contentious contracts.

Today, as underground production approaches full ramp-up and copper markets remain structurally attractive, Mongolia has returned to the negotiating table with significantly greater leverage. Unlike previous rounds of discussions that focused primarily on keeping the project moving, the latest negotiations have centered on redistributing long-term economic benefits rather than preserving investment certainty.

Recent negotiations culminated in a new financial agreement between Rio Tinto and the Mongolian government that reduces management fees, lowers shareholder loan interest rates and commits both parties to continue discussions over the unresolved Entrée Resources joint venture licenses. While the agreement removes several long-standing points of friction, the most strategically important issue, the fiscal treatment of the Entrée license areas remains unresolved and will likely determine how much value Mongolia ultimately captures from future underground production.

A New Political Environment
The current negotiations differ fundamentally from those that produced the original Investment Agreement in 2009.

The underground mine is now operational, Oyu Tolgoi is expected to become one of the world's largest copper producers over the coming decade, and higher copper prices have significantly increased the project's long-term economic value. At the same time, Mongolia has become increasingly focused on ensuring strategic mineral assets generate larger domestic economic returns.

Parliamentary Resolution No. 120 formalized this objective by directing the government to renegotiate several aspects of the Oyu Tolgoi framework while providing regular progress reports to Parliament. Rather than reopening the entire Investment Agreement, the government's strategy has been to renegotiate financial terms that directly influence Mongolia's eventual returns from its 34% ownership stake.

Management Fees Become an Early Victory
One of the government's primary objectives was reducing Rio Tinto's management fees.

Mongolian negotiators initially sought a 50% reduction, arguing that management-related charges had steadily increased through various supplementary agreements and materially reduced the project's profitability.

Following months of negotiations, Rio Tinto agreed to halve its management fees. Government officials estimate the change could improve Mongolia's economic share by approximately US$1.5 billion over the life of the project through lower operating costs and the elimination of duplicate charges.

While the reduction appears modest in percentage terms, it is significant because management fees directly reduce distributable profits. Since Mongolia does not expect dividends until well into the project's mature operating phase, lowering operating costs today increases future cash flows available to shareholders.

Lower Financing Costs Improve Long-Term Economics
The second major breakthrough involved shareholder loan financing.

Mongolia's 34% ownership stake has largely been financed through shareholder loans, with interest historically calculated at approximately LIBOR plus 6.5%. Successive project delays, cost overruns and compound interest significantly postponed the timeline for Mongolia to receive dividends.

The revised agreement reduces the shareholder loan interest rate by roughly 2.5-2.6 percentage points to approximately 7.9% while shortening future review periods from seven years to three years. Rio Tinto described the lower rate as reflecting the project's reduced risk profile as underground production advances.

Although Mongolia originally sought substantially lower financing costs, the negotiated reduction still represents one of the most meaningful financial concessions obtained since the project began and improves the long-term economics of the government's equity position.

The Entrée Licenses Remain the Key Outstanding Issue
Despite progress on financial terms, negotiations over the Entrée Resources joint venture remain unresolved.

The dispute centers on the Shivee Tolgoi and Javkhlant mining licenses, which are held through the Entrée/Oyu Tolgoi joint venture and contain strategically important underground mineral resources required for future mine development.

The core disagreement is not geological but fiscal.

Rio Tinto argues these license areas should continue operating under the stabilization provisions contained within the original 2009 Investment Agreement. Under that framework, production would remain subject to the project's stabilized 5% royalty regime.

Mongolian policymakers, however, have explored replacing the state's equity option within these licenses with a higher mineral royalty structure under current legislation. Such an approach would subject future production to a materially higher progressive royalty regime while increasing direct fiscal revenues to the government.

The outcome carries implications well beyond the Entrée licenses themselves. It will establish an important precedent for how Mongolia balances investment stability against evolving expectations for resource nationalism and fiscal participation.

Recognizing the significance of the issue, Parliament has postponed broader discussions regarding copper royalty reforms until negotiations over the Entrée licenses are completed.

The Tax Dispute Has Not Been Resolved
Another issue that continues to complicate relations is Oyu Tolgoi's tax dispute with Mongolian authorities.

Earlier this year, Oyu Tolgoi transferred approximately MNT 1.6 trillion (around US$440 million) to the Mongolian State Treasury following tax assessments covering previous fiscal years. The payment attracted significant public attention and was widely presented as evidence of progress in government negotiations.

However, the legal position remains unchanged.

Rio Tinto and Oyu Tolgoi continue to dispute the assessment and maintain international arbitration proceedings. The payment was made to comply with domestic legal requirements while preserving the company's legal rights during the dispute resolution process.

Consequently, although the transfer provided a political victory for the government, it does not represent final settlement of the underlying tax case. A definitive resolution will depend on ongoing legal proceedings.

A More Assertive Negotiating Strategy
The latest negotiations illustrate a broader shift in Mongolia's approach toward strategic mining assets.

Rather than questioning foreign investment itself, policymakers have increasingly focused on improving the distribution of economic benefits through lower financing costs, reduced operating expenses and potentially higher fiscal participation.

For Rio Tinto, preserving investment stability while maintaining constructive relations with Mongolia has become increasingly important as Oyu Tolgoi approaches peak underground production. The company has therefore shown greater willingness to make financial concessions than in previous negotiation rounds.

Nevertheless, analysts caution that political risks remain elevated. Public pressure for greater national benefits continues to increase, particularly as copper prices strengthen and Oyu Tolgoi moves closer to producing around 500,000 tonnes of copper annually. Recent protests temporarily disrupting concentrate exports demonstrate that mining remains politically sensitive despite the latest agreement.

CMM Insight
The latest agreement represents the most meaningful recalibration of the Oyu Tolgoi partnership since the comprehensive reset reached in 2022. Reductions in management fees and shareholder loan interest rates should improve Mongolia's long-term economic returns while allowing Rio Tinto to preserve operational certainty during the underground mine's critical production ramp-up.

However, the negotiations are not over.

The unresolved treatment of the Entrée Resources licenses remains the most consequential issue still on the table. Beyond determining the fiscal framework for two strategically important mining licenses, the outcome will signal how Mongolia intends to balance contractual stability with growing domestic expectations for a larger share of mineral wealth.

For investors, the recent agreement reduces some near-term political uncertainty but does not eliminate it. As Oyu Tolgoi enters its next phase of production growth, the project's long-term investment case will increasingly depend not only on copper prices and operational execution, but also on whether Mongolia and Rio Tinto can establish a durable fiscal framework that satisfies both shareholder returns and national economic priorities.

Prime Minister Uchral: Government Achieves Historic Breakthrough in Oyu Tolgoi Negotiations www.montsame.mn

On June 30, Prime Minister Uchral Nyam-Osor announced that the Government of Mongolia has achieved a historic breakthrough in the Oyu Tolgoi negotiations ahead of the National Naadam Festival.

First, under the updated agreement, Oyu Tolgoi's management costs have been reduced by USD 2.2 billion (approximately MNT 8 trillion), increasing the Mongolian side's financial return by USD 1.5 billion (around MNT 5 trillion).

On the threshold of the government's first 100 days, the shareholder loan interest rate has been slashed by 2.5 percentage points, dropping from 10.5% to 7.9%. This adjustment saves USD 6.2 billion (MNT 22 trillion) that would have otherwise gone toward loan interest payments, boosting Mongolia's future returns by MNT 8 trillion.

Second, the negotiation window to lower shareholder loan interest rates, which previously opened only once every 7 years, has been shortened to every 3 years.

Third, Mongolia will begin receiving its Oyu Tolgoi dividends this year, moving the timeline up significantly from the previously projected year of 2037.

In total, the negotiations have slashed costs by USD 8.4 billion (over MNT 30 trillion) and increased Mongolia's future direct returns by USD 4 billion (MNT 13 trillion).

"Mongolia's wealth must benefit the Mongolian people. As a democratic and free nation, we will always support foreign investment. We will equally protect the legitimate interests of all investors alongside the rights of our own citizens, and we look forward to continuing our close cooperation," the Prime Minister stated.

State budget recorded a MNT 1 trillion deficit in 2025 www.gogo.mn

On June 30, the Budget Expenditure Oversight Subcommittee of the Parliament met to hold the second reading of the draft parliamentary resolution approving Mongolia's 2025 consolidated budget performance and the Government's 2025 consolidated financial statements.

The report was presented by Minister of Finance Z.Mendsaikhan.

According to the report, the 2025 consolidated budget recorded balanced revenue and grants totaling MNT 30.3 trillion, equivalent to 33.7% of gross domestic product (GDP). Total expenditure and net lending reached MNT 31.3 trillion, or 34.8% of GDP.

As a result, the consolidated budget posted a balanced deficit of MNT 1.03 trillion, equivalent to 1.1% of GDP.

For the state budget alone, balanced revenue and grants totaled MNT 19.0 trillion, achieving 95.9% of the planned target, while total expenditure and net lending amounted to MNT 20.4 trillion, representing 90.5% of the approved budget.

The report also noted that MNT 2.14 trillion, or 73%, of planned domestic investment was allocated to 613 projects and programs during 2025. In addition, MNT 1.87 trillion, or 96%, was invested in 116 projects financed through foreign loans and grants.

Overall, MNT 4.01 trillion was invested in 729 development projects and programs.

As part of these investments, contracts were signed with approximately 1,800 business entities, around 110,000 jobs were sustained, and 490 projects and facilities were completed and commissioned nationwide.

Japan to Supply Diagnostic Equipment to National Cancer Center www.montsame.mn

Minister of Finance of Mongolia Mendsaikhan Zagdjav and Ambassador of Japan to Mongolia Igawahara Masaru signed an Exchange of Notes and a Record of Discussions yesterday for the "Project for the Provision of Diagnostic Equipment to the National Cancer Center." The project is being implemented under the "Economic and Social Development Programme," funded by a non-refundable grant from the Government of Japan.

During the signing ceremony, Minister Mendsaikhan highlighted the year-on-year increase in non-communicable diseases in Mongolia, particularly cancer. He expressed gratitude to the Government of Japan and the Japan International Cooperation Agency (JICA) for stepping in to implement the grant project to help address this pressing issue. The Minister noted his satisfaction that the project will expand the National Cancer Center's diagnostic and treatment capacities, creating vital opportunities for the early detection, diagnosis, and treatment of the disease. He also expressed confidence that the initiative will make a significant contribution to improving the overall quality and accessibility of the country's healthcare services.

Financed by a Japanese government grant of JPY 980 million (MNT 21.9 billion), the project will modernize the technical capacity of the National Cancer Center, Mongolia's specialized national referral hospital for oncology. Under the agreement, the center will be supplied with state-of-the-art medical technology, including CT scanners, X-ray machines, mammography systems, ultrasound diagnostic devices, and patient monitors.

Enkh-Od.G

MIAT - Mongolian Airlines mulls 10 Airbus jets www.ch-aviation.com

MIAT - Mongolian Airlines (OM, Ulaanbaatar) is looking to purchase ten Airbus aircraft, road and transport minister Borkhuu Delgersaikhan told local media during an event on June 25, 2026. The move is part of a multipronged strategy to improve the country's air transport sector.

"As the national carrier, MIAT has decided to acquire ten aircraft. We are taking this step with confidence," Delgersaikhan said. He explained that the airline's heavy reliance on leased aircraft has driven up costs, with nine of its ten aircraft currently under lease.

"While we are transporting both international and domestic passengers, the high lease payments mean the airline is not generating sufficient returns," he added.

The aircraft will be acquired through long-term finance leases or other financing arrangements. Delgersaikhan said the ministry is in talks with two financial institutions, including the Trade and Development Bank of Mongolia, which is prepared to provide financing guarantees, as well as an undisclosed French party.

Describing the acquisition as "a very important milestone" for Mongolia, Delgersaikhan said the government intends to select an Airbus type best suited to MIAT's operational requirements.

MIAT last operated an Airbus aircraft in 2011 when it retired its sole A310-300 after 13 years of service. According to ch-aviation fleets data, the carrier currently operates one B737-8, three B737-800s, one B757-200(PCF), one B767-300ER, two B787-9s, and two CRJ700s.

MIAT, which did not indicate the plans during a recent interview with ch-aviation, did not respond to a request for comment.

By Dirk Andrei Salcedo

Mongolian president hails China-aided central sewage treatment plant www.news.cgtn.com

Mongolian President Ukhnaa Khurelsukh on Tuesday described the new central wastewater treatment plant in Ulan Bator, built with assistance from China, as a symbol of the Mongolia-China comprehensive strategic partnership and the friendship between the two peoples.

Khurelsukh made the remarks while visiting the facility, which officially commenced operations in mid-June.

He thanked everyone involved in the project, saying the new plant will improve the living environment for residents of the Mongolian capital, help protect the ecological balance, and support the city's long-term development.

Construction of the facility began in 2019. With a daily treatment capacity of 250,000 cubic meters, which is twice that of the previous plant commissioned in 1964, it significantly expands the city's wastewater treatment capacity, according to the presidential press office.

The new plant can fully process sludge generated during wastewater treatment and produce electricity to meet about 35% of its own energy needs, reducing annual electricity costs by an estimated 7 to 8 billion Mongolian tugriks ($1.95 million to $1.96 million), it said.

Meanwhile, Tsogtsaikhan Turkhuu, director of the Water Supply and Sewerage Authority of Ulan Bator, said the project was completed despite challenges posed by the COVID-19 pandemic. He added that around 70 employees have been trained in China since 2023 to operate the facility.

Ulan Bator is home to more than half of Mongolia's population of 3.5 million.

Rio Tinto and Government of Mongolia agree to adjust Oyu Tolgoi shareholder loan interest rate www.marketscreener.com

Rio Tinto and the Government of Mongolia have reached an agreement to adjust the shareholder loan interest rate for the Oyu Tolgoi project1, in line with the requirement under the Shareholders Agreement to periodically review the appropriateness of the rate.

Rio Tinto and the Government of Mongolia have also agreed to work together to resolve matters relating to the Entrée mine lease areas in a timely manner and bring forward distributions to shareholders.

Rio Tinto Copper Chief Executive Katie Jackson said: "This agreement, along with the agreement in principle on management fees reached in May, demonstrates Rio Tinto's ongoing commitment to the long-term success of Oyu Tolgoi and our partnership with the Government of Mongolia. The adjusted rate reflects a forward-looking assessment of Oyu Tolgoi's risk profile as the project matures to a lower risk, steady-state operation that will achieve its full potential for the benefit of all parties."

The ramp-up of production at Oyu Tolgoi remains on track to deliver an average of around 500ktpa2 of copper from 2028 to 2036. As the largest-ever foreign direct investment made in Mongolia, Oyu Tolgoi employs around 17,000 people, 97.8% of which are Mongolian, and has returned $6.1 billion in taxes, fees, and other payments since 2010.

1 Oyu Tolgoi LLC is jointly owned by Rio Tinto, which holds a 66% interest, and the Government of Mongolia, through Erdenes Oyu Tolgoi, which owns 34%.

2 100% basis and stated as recoverable metal.

Central Wastewater Treatment Plant Supports City Expansion, Cuts Pollution www.montsame.mn

President Khurelsukh Ukhnaa expressed his gratitude to everyone involved in the construction of the new Central Wastewater Treatment Plant (WWTP), which aims to provide a healthy living environment for Ulaanbaatar’s residents and ensure ecological balance.

The President thanked the project leaders, relevant organizations, enterprises, engineers, and technical staff from both countries who participated in this massive development project. He noted that the facility is designed to meet the growing needs of the city for the next 20 to 30 years-making it a milestone project of a scale unseen in Ulaanbaatar for decades.

He recalled his time serving as Prime Minister, during which he made the decision to build the new WWTP, laid its foundation stone, and initiated the construction.

President Khurelsukh expressed his satisfaction that the WWTP, which consolidates the “Comprehensive Strategic Partnership” between Mongolia and China and serves as a symbol of friendship and cooperation between their peoples, is establishing the core conditions required for the city’s expansion and the reduction of environmental pollution.

The new plant, consisting of 55 buildings and facilities, can treat 250,000 cubic meters of wastewater per day, which is twice the capacity of the current facility. The facility will fully process its sewage sludge to generate electricity, covering 35% of its own internal energy needs. It means an annual energy savings of MNT 7-8 billion.

A complementary Water Recycling Plant, which integrates technologically with the main treatment facility, was also recently commissioned through a grant from the Millennium Challenge Corporation (MCC).

The feasibility study of the plant was developed by the French company Artelia Ville & Transport under a contract commissioned by the Governor's Office of the Capital City. General contractors were a joint consortium of China Tiesiju Civil Engineering Group and Beijing Construction Engineering Group.

The project involved 400 to 650 personnel from 17 domestic subcontracting companies, alongside more than 60 Chinese engineers and technical specialists.

"Despite facing major difficulties and obstacles such as the global pandemic, we are thrilled that the Central Wastewater Treatment Plant has been successfully commissioned thanks to the decisive actions taken by the government at that time. We have been training around 70 employees in China since 2023 to operate this facility," stated Turkhuu Ts., Head of the Ulaanbaatar Water Supply and Sewerage Authority.

The old Central Wastewater Treatment Plant, commissioned back in 1964, had a design capacity to receive 160,000-170,000 cubic meters of water per day.

Although it underwent three expansions and upgrades over the years, the city's rapid population growth caused pollution levels to spike by 3 to 5 times above acceptable limits. This severely degraded its treatment capacity and led to frequent technical and technological breakdowns.

Mongolia Secures USD 545 Million in Investment Agreements and MoUs www.montsame.mn

More than 120 foreign investors, along with representatives of the Bank of Mongolia and Mongolia's private sector, participated in the expanded "Unlock Mongolian Economy" meeting of the Economic Council under the Prime Minister of Mongolia.

Key outcomes of the meeting include:

Six investment agreements and memorandums of understanding worth a combined USD 545 million were signed.
Phillip Capital, a Singapore-based investment management firm overseeing USD 65 billion in assets, announced plans to open an office in Mongolia.
Hungary's OTP Bank formally submitted its application to establish a branch in Mongolia to the Prime Minister.
Addressing the meeting, the Prime Minister of Mongolia said the discussions held during the Summer Davos Meeting in Dalian on policy stability, economic diversification, and Mongolia's development opportunities had now been translated into more detailed talks. He briefed investors on the country's efforts to improve its legal and investment framework, including the government's "Liberate" reform agenda, emphasizing that the meeting had already produced tangible results in attracting investment to Mongolia.

During the discussion, László Wolf, Member of the Board of Directors of OTP Bank, said that if the bank enters the Mongolian market, it would be prepared to finance large-scale projects and is also interested in offering mortgage products. He noted that Mongolia's current legal framework is not yet particularly favorable for foreign banks but welcomed the Prime Minister's commitment to legal reforms and market liberalization. "The government's reforms and planned liberalization will create greater opportunities for us to invest in Mongolia. Investors highly appreciate the reforms that have been implemented and those currently being planned."

Meanwhile, Luís Santos, co-founder of European investment management company Alpac Capital, which specializes in technology and renewable energy investments, said Mongolia has established the necessary conditions to attract Western investors.

"Mongolia has moved beyond being a destination primarily for tourists and is now becoming an attractive destination for international investors. We see the country strengthening investor confidence, creating a stable business environment, and consistently reinforcing the foundations of good governance. It gives us confidence to return to Mongolia and pursue long-term cooperation," Santos said.