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Highlights
- Rio Tinto agrees to over $213 million settlement over Mongolian mine lawsuit
- Legal action relates to delayed cost disclosures for Oyu Tolgoi mine expansion
- Fresh scrutiny arrives amid ongoing bribery case in the UK involving Mongolia
Mining heavyweight Rio Tinto (ASX:RIO) has reached a significant legal settlement, agreeing to pay US$138.75 million (approximately A$213.65 million) in a class action lawsuit concerning its involvement in the Oyu Tolgoi copper-gold project in Mongolia. The lawsuit alleged that the company withheld key information from investors regarding rising costs and project delays, casting a spotlight on corporate transparency within the resources sector.
Background to the Lawsuit
The legal action was initiated on behalf of shareholders in Turquoise Hill Resources, a Montreal-based mining company that was majority-owned by Rio Tinto during the disputed timeframe—between July 2018 and July 2019. Investors claimed that they were misled when Rio Tinto assured the market in October 2018 that the US$5.3 billion expansion of the Oyu Tolgoi mine was progressing on schedule and within budget. However, by July 2019, Rio Tinto disclosed cost overruns of US$1.2–1.9 billion and delays of up to 30 months.
The preliminary agreement, which still requires approval from the U.S. District Court in Manhattan, not only covers claims against Rio Tinto but also includes its former CEO Jean-Sébastien Jacques, who stepped down in March 2021.
Impact on Shareholders and ASX Market Reaction
Following the announcement, Rio Tinto’s stock experienced a modest dip, with shares falling 1.4% to A$104.50 by mid-morning on the ASX. As a constituent of the ASX200 stocks, Rio Tinto’s movements are closely watched by both institutional and retail investors, making this legal outcome a matter of broader market interest.
The case underscores the importance of timely and accurate disclosure, particularly for companies managing complex and high-cost international operations. It also serves as a reminder of the reputational and financial risks associated with delayed project updates and cost mismanagement.
Additional Legal Pressures
Rio Tinto's legal challenges are not over. The company is currently facing a separate bribery lawsuit filed by the Mongolian government in the UK High Court. The government alleges that at least two Mongolian politicians were targeted between 2008 and 2012 during earlier stages of the Oyu Tolgoi project negotiations.
These developments add further scrutiny to one of the world’s largest mining companies, especially as global investors increasingly demand transparency and adherence to ethical practices across supply chains and project developments.
