Rio Tinto rejects Mongolian bid to alter terms for Oyu Tolgoi copper, gold projects
16 Oct 2012
Rio Tinto, the world's second-largest mining company has rejected the Mongolian government's renewed request to alter the terms of the agreement of the Oyu Tolgoi copper and gold project.
Seeking to raise its stake from 34 per cent to 50 per cent and alter the terms of royalty payments, Mongolia's mining minister sent a letter to Vancouver-based Turquoise Hill Resources, Rio Tinto's partner in the Oyu Tolgoi copper and gold mine, requesting an amendment to the terms of the agreement signed in 2009.
London-based Rio Tinto holds a controlling 51-per cent stake in Turquoise Hill (formerly Ivanhoe Mines), which in turns holds a 66-per cent stake in the Oyu Tolgoi copper and gold mine, but Rio Tinto is paying most of the development cost.
In October 2011, the Mongolian government had reached a deal with Rio Tinto and Ivanhoe Mines not to alter the original terms of the agreement for developing the massive Oyu Tolgoi gold and copper project. (See: Mongolia ends Oyu Tolgoi row with Rio Tinto, Ivanhoe Mines)
The Mongolian government was planning to increase its stake in the $10-billion Oyu Tolgoi project, although such an increase would have been permissible only after 30 years, as per the original agreement it signed with Rio Tinto and Ivanhoe in 2009.
Ivanhoe spent over six years negotiating with the Mongolian government prior to reaching an agreement in October 2009 to develop the site, which is expected to open in 2013.