This was published 9 years ago
Tax demand set to cause more delays for Turquoise Hill Resources at Mongolian mine
By Amanda Saunders
The Mongolian government has slapped Rio Tinto's $US6.2 billion copper and gold mine Oyu Tolgoi with a tax bill of about $US130 million in what could prove a fresh delay to the expansion of the mine.
Mine operator Turquoise Hill Resources, a Rio subsidiary, has been dealt a fresh audit claiming unpaid taxes, penalties and disallowed entitlements linked to the development of the massive project, understood to total about $US130 million.
Hiccup: Turquoise Hill Resources has received a tax bill for the Oyu Tolgoi mine.Credit: Bloomberg
But Turquoise Hill argues there is no basis for the audit claim, and said in a statement that if there was no resolution by the end of the month it would delay the mine's next $US4.2 billion underground development phase.
The project has been plagued by delays. An open-cut copper and gold mine already exists at Oyu Tolgoi, but the development of a bigger and more lucrative mine has been stalled by a funding stand-off between Rio and the Mongolian government.
Rio controls the Oyu Tolgoi project through a 66 per cent stake held by its Turquoise Hill subsidiary. The Mongolian government owns the other 34 per cent.
Rio is aiming to sign a deal for the new $US4.2 billion underground mine before September 30.
Rio and Turquoise Hill said they could turn to international arbitration if they found the claim breached their investment agreement with the Mongolian government.
Much of the $US4.2 billion of finance that Rio secured for Oyu Tolgoi more than a year ago was due to expire on March 31 and those pledges needed to be extended when the deadline was passed. The lenders have rolled forward the expiry dates to September 30.
Of the latest problem, Turquoise Hill chief Kay Priestly said ''we strongly disagree with the claims in the audit report and are currently reviewing all options to resolve this matter''.