THE FINANCIAL TIMES: Rio Tinto’s Mongolian wild child causing headaches
Every large mining company has a problem child: a tricky project that eats up the management’s time. Rio Tinto’s bawling brat is the Oyu Tolgoi copper mine. The difficulties reflect joint ownership with Mongolia, a sparsely populated Asian nation adjusting uneasily to its mineral wealth. Ulaanbaatar, which controls 34%, is demanding an independent review of cost jumps. These threaten its dividends.
The fracas should not be dismissed lightly. Yes, Mongolia has complained about overruns before. Much of Oyu Tolgoi’s copper lies deep underground. When the oft-delayed project began, profits from surface extraction were meant to pay for digging up more red metal below. Then it became clear the underground mine alone could cost as much as a third more than the original $5.3bn budget. Cue squabbles...