Rio Tinto faces FCA survey of $ 6.75 billion Mongolian mine

Rio Tinto PLC update

British Financial Watchdog is investigating Rio Tinto and its late-running $ 6.75 billion underground copper project in the Gobi Desert, Mongolia.

The Financial Conduct Authority is investigating whether British-Australian companies violated listing rules in 2018 and 2019 with disclosures about the value of Oyutrugoy, according to people familiar with the situation.

Rio will expand underground in Oyu Tolgoi in July 2019 Additional $ 1.2 billion to $ 1.9 billion in capital 16 to 30 months late. He said difficult ground conditions meant that the project design and development schedule had to be reconsidered.

However, with some investors Former employee Rio claims he knew that the expansion of the copper mine was at stake a few months before the issue was disclosed to investors.

At the time the delay was announced, Rio’s CEO was Jan Sebastian Jack, who resigned last year in response to investor backlash against the destruction of two ancient Aboriginal rock shelters in Australia.

Rio declined to comment. Earlier, he stated that he had “consistently complied” with disclosure obligations related to Oyu Tolgoi’s underground development.

“We couldn’t comment on individual companies,” the FCA said.

The FCA investigation adds to the legal issues of a $ 140 billion company.Serious Fraud Office in the United Kingdom Start investigation In 2017, Rio paid a consultant working on a controversial iron ore deposit in Guinea.

Rio has also been charged with fraud by U.S. financial regulators, £ 27m fine from FCA To increase the value of Mozambique’s coal assets.

Violations of FCA’s disclosure rules regarding Oyu Tolgoi may result in additional fines.

This project is one of Rio’s most important growth assets. When the underground expansion is complete, it will become one of the largest copper mines in the world, capable of producing about 500,000 tonnes of metal annually.

The Oyu Tolgoi project has been plagued by problems and disagreements with Ulaanbaatar. First production The mine is scheduled for October 2022.

Rio has blamed difficult ground conditions and “ground engineering” problems for most of the setbacks in underground development.But that explanation Have been challenged In a US court by US hedge fund Pentwater Capital Management.

PCM is a document filed this year as part of a class action, in which senior executives at its Rio and Toronto-listed subsidiary Turquoise Hill Resources (TRQ) said a few months before the issue was disclosed to investors. He claimed he knew that expansion was at stake.

He added that delays and cost overruns were primarily the result of inadequate “engineering, procurement and construction” in critical tunnels by Rio and other contractors.

Rio is trying to dismiss the proceeding. Earlier, the proceedings stated that there was “no merit.”

The FCA investigation is conducted because an independent consulting group is set up to publish the results of the review to cost overruns and delays at Oyu Tolgoi.

This review was requested by the Mongolian government, which owns 34% of the project. The remaining 66% is owned by TRQ. Since the announcement of the overrun, the stock price has halved.

“We will receive the final report of an ongoing independent review of the cost overrun and schedule delays of the Oyu Tolgoi underground expansion in early August,” the Mongolian government said in a statement.

“I hope the final report will reveal many of the issues and claims surrounding the project and give a more transparent and complete view of what has happened to the project in the last few years.”

Rio will report its results on Wednesday and will announce its highest-ever semi-annual profit against the backdrop of soaring iron ore, its flagship commodity.

Additional report by Kate Beioley

Rio Tinto faces FCA survey of $ 6.75 billion Mongolian mine

Source link Rio Tinto faces FCA survey of $ 6.75 billion Mongolian mine

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