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Mongolia demands ‘more transparency, more visibility’ from Rio Tinto www.afr.com
London | The Mongolian government has demanded “more transparency, more visibility” from Rio Tinto over the Oyu Tolgoi copper mine, following an independent review that last month blamed management failures for missed deadlines and cost blowouts.
Mongolian ministers and officials are in London to discuss the mine with the British government, and are understood to be planning a visit to Canberra early next year, as they seek to put pressure on the dual-listed UK-Australian mining giant to come clean about the problems and resolve them.
The $US6.75 billion ($9.2 billion) mine is running almost two years behind schedule and is $US1.45 billion more expensive than its original $US5.3 billion budget, which Rio previously ascribed to more difficult than expected geology.
But an independent review, forced on Rio Tinto by minority shareholders and released last month, suggested that the primary issue was weak project management.
Deputy cabinet secretary Solongoo Bayarsaikhan, who is visiting London with deputy foreign minister Munkhjin Batsumber, said the review had reached “quite different conclusions compared to what Rio Tinto told us so far”.
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“Obviously we appreciate the complexity of the project, we think it’s quite an undertaking to build this huge project in Mongolia,” she said.
“We need to have very honest conversations with Rio Tinto about why there are delays, why there are certain issues, and why there are certain claims made about why there are delays.”
She said the government was “carefully reviewing” the independent report, and wanted “more transparency and more visibility over the project”.
The two sides needed to “create a stronger partnership based on mutual trust and mutual respect”.
The Mongolian government is trying to tread a fine line between holding Rio Tinto to account for the problems at the mine, without developing a reputation as a difficult government for foreign investors to deal with.
Ms Bayarsaikhan was careful to praise Rio Tinto’s presence in Mongolia, and said she hoped that “in the near future we will come to a mutually beneficial solution based on the best interests of the project”.
“It’s challenging but we will get there. We are very much focused on resolving the issues, rather than having positional fights and disagreements,” she said.
The Mongolians also have to move at a pace that allows other developments in the Oyu Tolgoi story to unfold.
Turquoise Hill Resources, which is 50.79 per cent owned by Rio Tinto and which owns 66 per cent of Oyu Tolgoi. The other one-third stake in the mine belongs to the Mongolian government. A judgment is that case could be imminent.
There is also the potential for regulatory investigation as to whether Rio Tinto made full and accurate disclosures to the market about problems at the mine.
These issues could affect the balance of negotiating strength between the company and government, and the amount of compensation that might be offered or demanded.
BY: Hans van Leeuwen covers British and European politics, economics and business from London. He has worked as a reporter, editor and policy adviser in Sydney, Canberra, Hanoi and London. Connect with Hans on Twitter. Email Hans at hans.vanleeuwen@afr.com
Published Date:2021-09-16
