Company - Oyutolgoi

Mongolian Government suggested Oyutolgoi's “Dubai” agreement amendment, not termination

Oyu Tolgoi, a giant copper project in Mongolia’s Gobi Desert is back in the spotlight when a spat with a dissident shareholder comes.

On 11 January 2021, Oyu Tolgoi LLC issued a press release regarding the tax matters, which reads, “Oyu Tolgoi LLC will apply over the coming days to include the new matters from the latest Tax Assessment in the existing international arbitration as the matters are substantially similar and, in some cases, identical. 

Same day, on Monday, Turquoise Hill Resources Company, which focuses on the operation and development of the Oyu Tolgoi copper-gold mine, said the Government of Mongolia has advised Rio Tinto that it is dissatisfied with the results of the Definitive Estimate, which was completed and delivered by Rio Tinto, and is concerned that the significant increase in the development costs of the Oyu Tolgoi project has eroded the economic benefits it anticipated to receive therefrom.


18 December 2020, Turquoise Hill Resources Ltd announced the completion and delivery by Rio Tinto of the Definitive Estimate, which refines the analysis contained in the feasibility study underlying the Company’s Oyu Tolgoi Technical Report dated and filed on August 28, 2020.
 
Solongoo Bayarsaikhan, Deputy Chief of the Cabinet Secretariat of Mongolian Government told reports on Wednesday that Mongolian Government suggested Underground Mine Development and Financing Plan (Dubai Agreement) amendment, not termination. It is not possible to maintain and implement the agreement as it is, but there are options that could be review and evaluate. According to new financial estimates for 2020, the expectations for 2009 and 2015 have changed.


Turquoise Hill expressed that it is committed to engaging immediately with the Government of Mongolia and Rio Tinto to address the Underground Development Plan and revisit the sharing of economic benefits arising from the Oyu Tolgoi project in the context of agreeing on a comprehensive financing plan as well as addressing the other issues raised.
Turquoise Hill Resources announced that Oyu Tolgoi LLC has received, and is evaluating, a Tax Act ("tax assessment") for approximately US$228 million cash tax from the Mongolian Tax Authority (MTA) relating to an audit on taxes imposed and paid by Oyu Tolgoi LLC between 2016 and 2018. This tax assessment is being evaluated by Oyu Tolgoi LLC and a response will be issued within the timeframe required by Mongolian Law.
 
As previously announced by Turquoise Hill, on 16 January, 2018, Oyu Tolgoi LLC had received and was evaluating a tax assessment for approximately US$155 million from the MTA relating to an audit on taxes imposed and paid by Oyu Tolgoi LLC between 2013 and 2015.

 



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