The world's second-largest miner, Rio Tinto, faced a new setback in its large-scale underground copper mining project at Oyu Tolgoi in Mongolia, as the administrative court upheld the claims of a non-governmental organization that the due process of the agreement underlying the asset development was not followed up.
The local Darghan Mongol group Nogoon Negdel, which advocates environmental balance and economic independence, is contesting the agreement signed in 2015, as well as the authority of Mongolian officials involved in the negotiations leading to the agreement.
A formal written court decision is expected to be published in the coming weeks.
The upcoming lawsuit is one of many recent challenges that Rio Tinto has faced in Mongolia over the past two years.
In January 2018, the government serviced the Oyu Tolgoi project account in the amount of US $ 155 million in recurring taxes - the mine’s second tax dispute since 2014. The company said that at that time the charge was related to checking taxes levied and paid by the mine operator between 2013 and 2015
Shortly afterwards, a mine located in the southern Gobi Desert was forced to declare force majeure after protests by Chinese coal carriers disrupted supplies near the border.
The situation prompted Rio Executive Director Jean-Sebastian Jacques to visit Prime Minister Ukhnagiin Hurelsuk to discuss how to build mutually beneficial partnerships. The trip was followed by an announcement by the company that it was opening a new office in the country, focused on intelligence and local communications.
This problem reappeared in April when a group of Mongolian lawmakers recommended revising the 2009 agreement to begin construction of the mine. He also advised the cancellation of the 2015 agreement providing for underground expansion.
In July of this year, Rio warned that expansion underway would take 16-30 months longer than expected. He also warned that the project would cost an additional $ 1.9 billion in planned investments of $ 5.3 billion, mainly due to the increased risk of rockfalls.
Oyu Tolgoi was opened in 2001, and Rio gained control of it in 2012. It is expected that the ongoing expansion of the mine will increase production from 125-150 thousand tons this year to 560 thousand tons with a full slope from 2025, which will make it the largest new copper mine to be put into operation. after few years.
This giant mine is owned by one-third of the government of Mongolia, and two-thirds is owned by the Canadian company Turquoise Hill Resources. Of the 66% stake in Turquoise Rio, 51% belongs to the project.
Both Rio and Turquoise have denied that the Oyu Tolgoi underground mine development and financing plan (UDP) or any other underlying agreement was illegal.
