Thursday, September 18, 2014

Mongolia resolves tax dispute with Rio Tinto by reducing tax claim

The Mongolian Government has resolved its tax dispute with Rio Tinto by reducing its tax claims from $130m to $30m, clearing the way for the $4bn expansion of the Oyu Tolgoi copper-gold mine project to resume.

According to two sources familiar with the matter, the National Tax Dispute Settlement Council has reduced the tax claim and the Mongolian Government is waiting for a formal response from Rio Tinto, reported Bloomberg.

In June this year, the Mongolian Government had accused Rio Tinto and its subsidiary, Turquoise Hill Resources, of failing to pay taxes and penalties worth $130m relating to the first development phase of the $6.5bn Oyu Tolgoi mine.

Mongolia mining vice-minister Oyun Erdenebulgan was quoted by Reuters as saying: "I understand both parties are now working closely and effectively and nobody wants to delay because of this tax issue."

The project is expected to resume expansion works in the first quarter of 2015.

The Oyu Tolgoi gold and copper project is situated in the south Gobi region of Mongolia, around 80km north of the Chinese-Mongolian border and 550km due south of the capital Ulaanbaatar.

It is 66%-owned by Turquoise Hill, while the Government of Mongolia holds the remaining stake.

During the first phase of the project, which started production in July 2013, the mine produced 76,700t of copper concentrate by the end of the year.

However, after the completion of the latest expansion, the mine will produce more than 300,000t of copper concentrate a year.

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