Rio Tinto’s (LON, ASX:RIO) $5.4 billion second-stage expansion of its embattled Oyu Tolgoi copper and gold project in Mongolia is once again facing challenges and further delays amid political uncertainty and major changes at operator and Rio’s subsidiary Turquoise Hill (TSX, NYSE:TRQ).
The first to ring alarm bells was Rio Tinto itself, flagging the possibility of US$2.5 billion writedown on the mine during its half-year results delivery last August.
Then came the removal of former Prime Minister Altankhuyag Norov, who was part of the ongoing negotiations between Rio and Mongolia’s government over taxes and costs that have held up progress at Oyu Tolgoi for more than 18 months.
Adding to concerns operator Turquoise Hill said last week that chairman David Klingner and CEO Kay Priesly, both employees of Rio Tinto, would step down from January and December respectively.
Turquoise Hill: End “in-sight”
Delivering its third-quarter results Monday, the Vancouver-based miner said the company and Rio Tinto have made an offer to the government of Mongolia to resolve shareholder matters in a manner the companies believe “is beneficial to all stakeholders.”
Turquoise Hill had some positive figures to share: Net loss attributable to the company fell to $38.6 million, or 2 cents per share, in the quarter ended Sept. 30 from $94 million, or 9 cents per share, a year earlier.
Revenue was about $466 million in the third quarter, compared to only $15.7 million logged a year earlier.
The Canadian firm attributed the improvement to the start of sales from Oyu Tolgoi, expected to become the world’s third-biggest copper mine, and lower operating expenses.
The operation, located about 80 kilometers (50 miles) north of the Chinese border, will contribute about a third of Mongolia’s economy when in full operation, according to Turquoise Hill.