Mongolia is pushing to renegotiate the commercial terms of the massive Oyu Tolgoi copper mine, seeking earlier profit payments and a larger share of revenues from the project it co-owns with Rio Tinto.
The Mongolian government, which holds a 34% stake through state-owned Erdenes Mongol LLC., believes the current arrangement does not deliver sufficient economic benefits to the country. Officials are reportedly aiming to increase Mongolia’s share of returns to around 60% and accelerate dividend payments.
Rio Tinto acknowledged the discussions and said it remains committed to working with its partners to maximise the value of the project. “These discussions reflect our continued commitment to working together to achieve Oyu Tolgoi’s full potential for the benefit of all partners,” the company said in a statement.
Oyu Tolgoi is one of the world’s largest copper projects and a key asset in Rio Tinto’s long-term growth strategy as global demand for copper rises with the expansion of renewable energy, electrification and infrastructure linked to the energy transition.
Under the existing agreement, Mongolia is not expected to receive dividends until it repays a multi-billion-dollar loan from Rio Tinto that financed its share of the mine’s development costs. Those costs significantly exceeded early projections, potentially delaying dividend payments until the next decade.
Rio Tinto has invested heavily in expanding the underground operations at the mine. Copper production rose 61% last year as development progressed.
Relations between the partners have fluctuated in recent years. In 2022, Rio Tinto cancelled $2.4 billion of debt owed by Mongolia in what it described as a reset of the partnership, allowing the underground phase of the project to move forward.
However, tensions have resurfaced. Mongolia is currently pursuing a legal claim against Rio Tinto over alleged tax underpayments of roughly $450 million related primarily to depreciation accounting for the 2021 and 2022 tax years.
The renewed pressure also comes as Mongolia approaches national elections next year and commodity prices remain strong. Copper and gold prices are hovering near historic highs, increasing political scrutiny over how the country benefits from its mineral resources.
Oyu Tolgoi, which began production as an open-pit mine in 2011, is expected to become the world’s fourth-largest copper mine by 2030 once its underground expansion reaches full capacity.
