Mongolia calls for transparency as Rio Tinto seeks control of giant Oyu Tolgoi project
By Clara Denina and Praveen Menon
LONDON/SYDNEY (Reuters) – A senior official at the giant Oyu Tolgoi copper and gold mining project in Mongolia has called for greater transparency and more power for local management as global miner Rio Tinto seeks to buy out the troubled project.
Mongolia owns 34% of Oyu Tolgoi, one of the world’s largest known copper and gold deposits in the Gobi Desert, and Rio controls the rest through its 51% stake in listed Turquoise Hill Resources. in Toronto.
Rio Tinto and the Mongolian government reached an agreement in January to end a long-running dispute over a $6.75 billion expansion of the mine that is behind schedule and topped the $1.4 billion mark by $1.4 billion. budget. Rio waived $2.4 billion in debt the government owed it.
Shortly thereafter, Rio offered to buy Turquoise Hill’s remaining stake for approximately $2.7 billion, paving the way for direct ownership of Oyu Tolgoi.
“As a shareholder of Oyu Tolgoi, we are asking Rio Tinto for this project to be transparent and have a proper management structure and without that, it doesn’t matter who owns the shares,” said Tserenbat Namsrai, CEO of Erdenes. Oyu Tolgoi LLC, the Mongolian state-owned company.
“If Rio is successful with its offer to buy Turquoise Hill, it’s good for us because the decision-making will be shortened, that’s the good side (of the agreement).”
Speaking to Reuters in an interview, Nagi Otgonshar, Mongolian deputy minister in the Ministry of Mines and Heavy Industry, said they were internally watching and evaluating the outcome of Rio’s takeover bid.
“Ultimately, we are asking Rio Tinto to be transparent…previously not enough information was shared with the Mongolian government,” Otgonshar said.
“This is a highly publicized project and being able to share this information with the Mongolian people is crucial,” he added.
“We believe copper is the future and we would like to be one of the best players to attract more investors and OT is paving the way for new investments,” he said.
Namsrai said discussions are underway to advance the production date from the current target of mid-2023.
“With the cancellation of the $2.4 billion loan, the shareholding issue has been resolved and we are now discussing how to improve Oyu Tolgoi’s management to shorten the sustainable production period,” he said. declared Namsrai.
To ensure Mongolia benefits, more power must be given to Oyu Tolgoi’s management team, Namsrai said, without specifying how the government would ensure this.
Namsrai said COVID restrictions in Mongolia, recent shutdowns in China, logistical issues and changes to national labor laws meant they could go over budget again.
“The announced budget increase is…probably likely to be exceeded, although it’s hard to say by how much,” Namsrai said.
(Reporting by Praveen Menon; Editing by Bernadette Baum)
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