Rio Tinto cuts about 2,000 jobs at Oyu Tolgoi — report
Mining giant Rio Tinto (ASX, LON, NYSE: RIO) is said to have laid off about 2,000 workers at its $6.6 billion Oyu Tolgoi mine in Mongolia, amid negotiations between the company and the government on how to share revenue from the mine.
According to Bloomberg TV Mongolia, contractor Redpath Mongolia LLC confirmed the layoffs, but did not specify numbers.
While copper shipments from Oyu Tolgoi started last month, the long-running dispute between the Mongolian government and Rio over the massive copper-gold mine continues to drag on.
The government of Mongolia, which owns 34% of Oyu Tolgoi, has been at loggerheads with operator Turquoise Hill Resources (TSX:TRQ), which is controlled by Rio and is the owner the remainder of the mine, for months.
The Asian nation twice held up shipments from the mine, due to disagreements over the mine's expansion, which Turquoise Hill (then Ivanhoe Mines) has been advancing for more than a decade.
Those differences, together with cost overruns, employment and pay of Mongolian workers, contractors and corporate governance, taxation and the repatriation of earnings, remain sticking points.
Now Mongolia revealed it might soon convert its shares in Oyu Tolgoi into a public company, which will provide nationals with the chance to own a stake in one of the world’s largest copper deposits.
At full tilt, Oyu Tolgoi is set to produce more than 1.2 billion pounds of copper worth over $4 billion at today's prices, 650,000 ounces of gold ($800 million) and 3 million ounces of silver (under $100 million) each year.
Overall, the mine is set to contribute as much as a third of the nation's economy as it ramps up to full capacity.
Image by Gregory Kowalski