Mongolia is seeking to renegotiate the “unfair” commercial terms of mining giant Rio Tinto’s $18-billion Oyu Tolgoi copper mine, the Financial Times reported on Monday.
Mongolia’s Prime Minister Gombojavyn Zandanshatar warned Rio in a meeting on Monday that the current deal was “unfair”, adding that “this whole situation feels like the Mongolian people and the Parliament are being deceived”, the newspaper said, citing video footage it had seen.
Zandanshatar and other government officials will meet Rio executives, including head of copper Katie Jackson, this week to discuss the terms of the deal, the report said.
Mongolia owns 34% of Oyu Tolgoi, one of the world’s largest-known copper and gold deposits, while Rio holds a 66% stake. The facility is Rio’s biggest copper growth project and began openpit mining in 2011.
Mongolia took a multibillion-dollar loan from Rio Tinto at a floating interest rate that is currently over 11% to fund its share of the capital expenditure needed to develop the mine, the FT said.
The government is proposing Rio reduce the interest rate on the loan to less than 6% and cut the annual management fee it charges for the project, the report said, adding that Rio risks an increased rate of export tax if negotiations between the parties go poorly.
Reuters could not immediately verify the report. Rio Tinto did not immediately respond to a request for comment.
At peak production Oyu Tolgoi is expected to produce 500 000 metric tons of copper annually, according to its website.
In 2022, Rio agreed to waive $2.4-billion in debt owed to it by the government related to Oyu Tolgoi with both sides agreeing to “reset” their relationship.