A change in Rio Tinto’s upper-level management and the Mongolian government has led to a revised arrangement for the Oyu Tolgoi mine after Rio Tinto increased projected costs by $1.5bn to $6.8bn.
According to media reports, Solongo Bayarsaikhan, a high ranking Mongolian official, has confirmed that both sides have decided to cancel the prior deal. Jakob Stausholm, Rio Tinto’s new chief executive, is convinced that both parties will be able to find a mutually acceptable solution. Stausholm appointed Bold Baatar to head the company’s copper operations in January 2021. The new team has begun discussions with the Mongolian government.
The prior arrangement stated that Rio Tinto would finance its share of the mine’s construction and operation. The company would loan the government their part of the loan and pay dividends once the latter repaid the full amount borrowed from Rio Tinto. Mongolia owns 34pc of Oyu Tolgoi. It had raised concerns about not receiving dividends until after resources were depleted. The mine is expected to produce about 480,000mt of copper per year between 2028 and 2035.