Mongolia urges transparency as Rio Tinto seeks control of giant Oyu Tolgoi project -Breaking
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Clara Denina and Praveen Meon
LONDON/SYDNEY, (Reuters) – A high-ranking official from the Oyu Tolgoi mining operation in Mongolia called for more transparency and greater power for local management. Rio Tinto (NYSE) is looking to purchase the project.
Mongolia controls 34% Oyu Tolgoi. It is one the largest and most important gold and copper deposits worldwide. Rio, which owns 51% in Toronto’s Turquoise Hill Resources (NYSE):, has the remainder.
Rio Tinto and Mongolia’s government reached an agreement in January to resolve a dispute about a 6-billion-dollar expansion of the mine. The project is currently behind schedule, and was $1.4 billion more than budget. Rio has forgiven $2.4 Billion in government debt.
Rio offered to purchase the Turquoise Hill remaining stake at $2.7 billion. This opened the door to Oyu Tolgoi’s direct ownership.
Tserenbat Namsrai is the chief executive at Erdenes Oyu Tolgoi LLC. This Mongolian-state-owned company said, “As shareholder of Oyu Tolgoi,”
Rio will win its bid for Turquoise Hills. We are happy because decision-making time is shorter.
In an interview with Reuters, Nagi Ozgonshar, the vice-minister at Mongolia’s Ministry of Mining and Heavy Industry, stated that the ministry was observing and internalizing the results of Rio’s purchase offer.
Otgonshar stated that Rio Tinto must be transparent because previously, not enough information was shared with Mongolia’s government.
“This is an extremely scrutinized project and it is important to be able share that information the Mongolian people,” he said.
He said, “We believe copper is the future. We would like to become one of the leading players to attract investors. OT paves way for more investments.”
Namsrai indicated that talks were underway to push forward production from the target date of mid-2023.
Namsrai stated that the shareholding problem has been solved and they are now discussing ways to improve Oyu Tolgoi’s management in order to reduce the time period for sustainable production.
Namsrai stated that Mongolia must have more control over Oyu Tolgoi’s management to ensure it makes money, but he did not elaborate on the steps the government would take to do this.
Namsrai claimed that the COVID restrictions placed in Mongolia by China’s recent lockdowns, logistics issues, and revisions to labour laws in China could cause them to go over budget.
Namsrai stated that the budget increases are “probably going to be over” but it was difficult to predict how much.
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