Mongolia Revokes Licenses On Rio Tinto Mine
Mongolia has revoked the licenses for a key section of Rio Tinto's (RIO) Oyu Tolgoi copper-gold mine. This huge copper and gold facility is the largest capex investment that Rio Tinto has ever made. The mine is just coming into production and the first of a 60+ year supply of high-grade copper and gold ore has been processed. Full production was to begin shortly.
What does this mean for the already troubled Rio Tinto?
In an earlier article, Mongolia In Partnership With Ivanhoe Mines And Rio Tinto, I gave an overview, including a video, of the huge undertaking. It has not gone smoothly. Negotiations have been going on recently concerning Mongolia's desire to change the terms and conditions of the arrangement. The government would like to have a larger share of the corporation, be the controlling stockholder and collect a much larger share of the profits. Newly elected officials who are extreme resource nationalists are driving this perspective.
Tsakhiagiin Elbegdorj is now the president of Mongolia, and he is the force behind the issue. He drew up laws for parliament's approval, which would put new restrictions on foreign miners. Rio Tinto owns 66% of Oyu Tolgoi and Turquoise Hill Resources (TRQ), the Mongolian Government own the rest.
Rio Tinto's new chief executive Sam Walsh, promised investors "no growth for growth's sake," as the mining giant posted a $2.6 bn annual loss, its first ever.
What does this mean for the already troubled Rio Tinto?
In an earlier article, Mongolia In Partnership With Ivanhoe Mines And Rio Tinto, I gave an overview, including a video, of the huge undertaking. It has not gone smoothly. Negotiations have been going on recently concerning Mongolia's desire to change the terms and conditions of the arrangement. The government would like to have a larger share of the corporation, be the controlling stockholder and collect a much larger share of the profits. Newly elected officials who are extreme resource nationalists are driving this perspective.
Tsakhiagiin Elbegdorj is now the president of Mongolia, and he is the force behind the issue. He drew up laws for parliament's approval, which would put new restrictions on foreign miners. Rio Tinto owns 66% of Oyu Tolgoi and Turquoise Hill Resources (TRQ), the Mongolian Government own the rest.
Rio Tinto's new chief executive Sam Walsh, promised investors "no growth for growth's sake," as the mining giant posted a $2.6 bn annual loss, its first ever.
Bob Johnson
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