Mongolia And Rio Tinto Have Solved Tax Problems For Almost All Their Copper Mines

Mongolia has resolved almost all outstanding tax issues with Rio Tinto over the development of the Oyu Tolgoi copper mine and is confident the remaining issues will be resolved, the country's prime minister told Reuters.
The two partners have been sparring for years over the development of the Gobi Desert copper mine. It is the largest foreign investment project in China and is set to become the world's fourth-largest copper mine by 2030 as demand for the metal, which is crucial to the energy transition, heats up.
Resolving the outstanding tax issue would avoid arbitration proceedings and would mean the restoration of Rio's relationship with one of its top partners. Rio's relationship with the partner was so bad that it threatened to derail the mine's development.
"In the past, we had to resolve more than 10 issues with Rio Tinto regarding Oyu Tolgoi, but we have managed to resolve more than 90 percent of them," Mongolian Prime Minister L. Oyun-Erdene said in an interview during a visit to Washington.
"There are still some issues, but we believe we can continue negotiations and discussions with investors so that they can be resolved," he added.
Rio Tinto last year bought a majority stake in Turquoise Hill for $3.3 billion to streamline development of the mine, which will produce more than 500,000 tonnes a year. It now owns 66% of the shares, with the Mongolian government owning the remainder.
Last year, after development costs soared to $7.06 billion from $5.3 billion in 2016, Rio agreed to forgive $2.4 billion in debt owed to it by the government and pledged to adopt a structure that would not require additional loan financing.
Rio Tinto said at the time of its results that talks with the Mongolian government were ongoing. Rio Tinto began producing copper from underground operations in March and the mine is expected to be a pillar of profits for years to come.
Mr. Oyun-Erdene praised Rio's board for attending the Mongolian Economic Forum in July, which allowed them to "see the real situation and make the right decision," and he particularly praised Chairman Damin Bao for his leadership.
"I believe there will be no disputes in the future and we can successfully resolve all these issues," he said.
This will clearly show that Mongolia is open for business and investment, and will also help investors better understand the investment climate in Mongolia."
Rio Tinto said last month it had submitted an offer to settle the tax dispute. Jakob Stausholm, Rio's chief executive, said the "shift in the relationship with the Mongolian government and the Mongolian people is generating important momentum".