Rio Tinto Commits to Mongolia, to Open New Office in Ulaanbaatar

By Robb M. Stewart

MELBOURNE, Australia--Rio Tinto PLC (>> Rio Tinto plc) plans to open an office in Mongolia's capital and increase its workforce there, even as its Oyu Tolgoi copper and gold project has been hit with a new tax bill and has been blocked by protests from delivering to China.

The new office in Ulaanbaatar will be separate from Oyu Tolgoi, and will support the miner's exploration program and a technology center. Rio Tinto said it would increase its national employee numbers to about 80 through the course of 2018.

"Mongolia is one of Rio Tinto's most strategically important markets and we are here to stay," Jean-Sebastien Jacques, Rio Tinto's chief executive, said Monday. "Today we are demonstrating the deepening of our commitment to Mongolia."

Rio Tinto has invested more than US$7 billion in the country since 2010 and US$1.5 billion in taxes, royalties and other payments to the government, Mr. Jacques said.

Turquoise Hill Resources (>> Turquoise Hill Resources Ltd), a Canadian mining company that owns 66% of Oyu Tolgoi and which is 51% owned by Rio Tinto, last week said it had received a tax assessment in Mongolia for about US$155 million following an audit of taxes paid by Oyu Tolgoi between 2013 and 2015. It said it firmly believed the Oyu Tolgoi venture, which is 34% owned by Mongolia's government, had paid all required taxes and charges.

Days later, Turquoise Hill said protesters had used vehicles to block the main access road on the Chinese-Mongolian border, which was preventing Oyu Tolgoi convoys from delivering concentrates to customers. The mine continued to operate and no impact on product was expected, it said.

After two years of tense negotiations, Rio Tinto in 2015 struck a deal with the Mongolian government that cleared the way for a US$5.4 billion expansion of Oyu Tolgoi. The deal with the government settled disagreements around tax and royalty payments that had held up the underground expansion of the deposit.

Rio Tinto said it had appointed Munkhtushig Dul as its Mongolia country director and to lead its new office. He will coordinate with the Oyu Tolgoi team, led by managing director Armando Torres, it added.

Write to Robb M. Stewart at [email protected]