More corruption claims for Rio Tinto, this time in Mongolia where the mining giant is in an increasingly nasty dispute with the government and fellow shareholder in the giant Oyu Tolgoi gold and copper project.
Turquoise Hill Resources , the Canadian-listed company through which Rio controls the Oyu Tolgoi mine, said on Tuesday it had received an "information” request from the Mongolian Anti-Corruption Authority (ACA) to provide financial information.
“The request relates to an investigation about possible abuse of power by authorized officials during negotiation of the 2009 Oyu Tolgoi Investment Agreement. There is no indication in the ACA information request to suggest that Oyu Tolgoi is a subject of the investigation,” the company said in a statement.
Oyu Tolgoi is 66% owned by Turquoise Hill and 34% by the Mongolian government. Rio’s interest comes through a 50.8% stake in Turquoise Hill, which has a market value of $US6.6 billion.
These claims are the latest in a series of corruption allegations to bedevil Rio Tinto in the past decade. There was the Stern Hu case in China where a senior local Rio executive was jailed by the Chinese government, there are the continuing claims about the payment of illegal fees involving Rio’s past interest in the huge Simandou iron ore project in Guinea (that saw two senior executives fired and a former CEO lose benefits) and two senior executives, including former CEO, Tom Albanese have been charged by the US Securities and Exchange Commisison over Rio’s abortive $US4 billion Mozambique Coal debacle).
The Oyu Tolgoi project in Mongolia’s Gobi Desert is probably Rio’s most important growth asset in copper (which seems to be the company’s preferred future investment strategy).
Rio and its partners are spending more than $US5bn into an underground expansion project aimed at lifting output to 560,000 tonnes a year between 2025 and 2030. Oyu Tolgoi was discovered in 2001 and Rio gained control of it in 2012. The under execution underground expansion of Oyu Tolgoi is expected to lift production from the present 125,ooo–150,000 tonnes a year.
These are the latest claims against Rio and Turquoise Hill from the Mongolian Government. In January, Turquoise Hill was hit with a $US155 million tax claim, while copper exports from the mine have also been interrupted by protests near the border between Mongolia and China.
As well, the Mongolian government has ended a deal that allowed Rio to source power for Oyu Tolgoi from China. Rio is now seeking approval to build a power station at the mine, a move that could add to the costs of the underground expansion project. The local power station was in the original plans for the mine but was dropped for cost saving reasons. T
The power station could cost $US1 billion if Rio can’t do a power supply deal with a local utility.