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.

Published Date:2026-07-01