Mongolian Tensions Hit Rio Tinto
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Shares in mining giant Rio Tinto fell 3% yesterday (taking the two day fall to close to 6%) on reports, later confirmed of new tensions in Mongolia where it has the huge Oyu Tolgoi copper mine.
Media reports confirmed that Rio has halted shipments of copper concentrate Oyu Tolgoi following a week-long dispute at the border crossing to China and as well as a new tax row with the Mongolian government.
Rio shares ended at $78.83 on the ASX.
A dispute between Chinese trucking companies and Mongolian officials over health insurance for drivers has halted coal and copper movements at the remote Gants Mod crossing between the two countries for more than a week.
Rio Tinto’s Canadian-listed subsidiary Turquoise Hill Resources said that Oyu Tolgoi had declared force majeure in connection with customer contracts for copper concentrate because of the protest by Chinese coal transporters in the Ganqimaodu Border Zone.
The company reported the protesters used vehicles to obstruct the main access road in China leading to the Chinese-Mongolian border, resulting in Oyu Tolgoi convoys being unable to deliver concentrates to customers.
In Mongolia the mine is once again under political pressure, as politicians again claim the country has yet to see any real benefit from its huge expenditure on Oyu Tolgoi (which is 34% owned by the government).
The high costs of financing the multi-billion dollar mine mean that the government will not see its share of profits for several years, but Ulan Bator does receive some tax revenues.
Turquoise Hill holds 66% of the Oyu Tolgoi, revealed a new bill for $US155 million in back taxes, following a Mongolian audit of 2013-2015 tax payments by the mine. The company is disputing the assessment.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.