Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Rio Tinto has agreed to pay almost $140mn to settle a long-running class action lawsuit that had accused the world’s second-largest mining company of concealing issues in the expansion of its Oyu Tolgoi copper mine in Mongolia.
According to a proposed settlement filed in the US on Wednesday, the Anglo-Australian company will pay $138.75mn to end the case, which was brought by US hedge fund Pentwater Capital on behalf of minority investors in Turquoise Hill Resources, a Canadian company that was majority owned by Rio at the time the allegations were made.
The lawsuit was originally filed in 2021 after Pentwater claimed senior executives at Rio and Turquoise Hill had known the $6.75bn expansion of the Oyu Tolgoi copper mine would run significantly over time and budget months before the problems were disclosed to investors. Rio and Turquoise Hill had said the complaint was “without merit”.
The settlement comes against a backdrop of further potential turmoil for Rio at Oyu Tolgoi, which is one of the company’s key growth projects and one of the largest copper mines in the world.
The miner’s $3.3bn buyout of Turquoise Hill in 2022 was one of the crowning achievements of Jakob Stausholm, the chief executive who was asked to step down last month, along with first production at the underground mine in 2023 and improved relations with the Mongolian government.
But the mining company faces fresh issues at Oyu Tolgoi after the Asian country recently filed a lawsuit in London alleging corruption, which Rio said it “strongly denies”. The lawsuit preceded the resignation of the Mongolian prime minister this month. Luvsannamsrain Oyun-Erdene, who had championed the copper mine, resigned after a no-confidence vote casting doubt on relations between the future government and the mining industry.
Rio is also embroiled in a legal dispute with the Mongolian government over back taxes related to the mine.
The negotiated settlement over the Turquoise Hill allegations, which will need to be approved by the US District Court for the Southern District of New York, resolves one of the outstanding issues at Oyu Tolgoi.
“Rio Tinto welcomes the proposed resolution of this class action on appropriate and reasonable terms,” the company said on Thursday.
“As reflected in court filings, Rio Tinto and the individual defendants vigorously deny all allegations of wrongdoing, fault, liability or damages put forward in these proceedings,” it added, noting that the company and the other defendants, including former chief executive Jean-Sébastien Jacques, had not made any admission of guilt as part of the settlement.
Rio shares closed 2.3 per cent lower in Sydney on Thursday.
