Ivanhoe, Rio Reject Mongolian Bid to Change Oyu Tolgoi Deal

Oct 4 • Mining, News • 948 Views • 2 Comments on Ivanhoe, Rio Reject Mongolian Bid to Change Oyu Tolgoi Deal

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Ivanhoe Mines Ltd. and Rio Tinto Group, the world’s second-largest mining company, rejected an approach by Mongolia to increase the country’s 34 percent stake in the $10 billion Oyu Tolgoi copper mine.
Both companies got a letter from the Mongolian cabinet last week inviting them to discuss changes to the investment agreement, which included lifting the government’s stake by an additional 16 percent and changes to royalties, Vancouver-based Ivanhoe said yesterday in a statement.
The approach comes after Rio Tinto is already in dispute with Guinea over the Simandou iron ore deposit and highlights risks for investors as countries seek greater control of raw materials. So-called resource nationalism is the biggest business risk for global mining companies, Ernst & Young LLP said in August.
“It’s the continuing theme of governments changing the goalposts after the investment has been made,” said Prasad Patkar, who helps manage about $1.1 billion at Platypus Asset Management Ltd. in Sydney. “As an investor in these countries and these projects you have to expect and demand a higher return compensating for the higher risk that is now inherent in these things.”
Ivanhoe fell 6.6 percent to C$13.49 in Toronto to close at the lowest since July 6, 2010, yesterday. London-based Rio Tinto, which owns 49 percent of Ivanhoe, dropped 0.9 percent to A$58.77 at 10:15 a.m. in Sydney after plunging 4.1 percent yesterday.
“Ivanhoe Mines expects that the parties will continue to honor and implement the terms of the agreement as previously negotiated and has asked the government to affirm its full support for the agreement,” the company said.

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2 Responses to Ivanhoe, Rio Reject Mongolian Bid to Change Oyu Tolgoi Deal

  1. manfredo says:

    hi .i would like to get info where to send resume about work in the mongolian gold mine OYU TOLGOI.thanks for your help.

  2. arnold says:

    Me too.

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