Thursday, August 14, 2014

Rio’s Mongolian expansion in doubt

Rio Tinto’s planned $US5 billion ($5.37bn) expansion of its giant Oyu Tolgoi project in Mongolia is looking increasingly doubtful amid an ongoing tax dispute with the local government, The Australian reports.

The controller of the Oyu Tolgoi project, Rio subsidiary Turquoise Hill Resources, this week revealed it had started a second tax dispute resolution process with the Mongolian government, with Rio’s chief financial officer Chris Lynch warning analysts the expansion may not get the green light for some time, if at all.

“The CFO noted the Oyu Tolgoi underground project will not be approved until the tax dispute has been completely resolved through the arbitration process, which is likely to take some time, in our view,” JPMorgan analyst Lyndon Fagan said, according to The Australian.

“He also noted that if there is a significant deferral of the project, the company will need to question whether it will ever get done.”

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