Rio’s Mongolia Mine Cuts 1,700 Workers Amid Dispute Over Funding

August 15 02:47 2013 Print This Article

bloomberg.com  2013-08-14
By Michael Kohn and Jesse Riseborough

As many as 1,700 workers at Rio
Tinto Group’s $6.6 billion Oyu Tolgoi copper and gold mining
project in Mongolia, where shipments began last month, have been
laid off amid a financing dispute.
“This is a difficult time for everyone at Oyu Tolgoi but
it is especially difficult for those who work on the underground
mine,” Rio’s Oyu Tolgoi LLC said in an e-mailed statement. The
layoffs are a mix of contractors and employees.
The layoffs at Oyu Tolgoi, owned by Rio and the Mongolian
government, follow months of disagreement between the two sides
over how to share revenue from the mine. The lack of a decision
has already hurt the Mongolian economy, with foreign direct
investment down 43 percent this year. A planned $5.1 billion
underground expansion has been delayed, Rio said in July.
“These layoffs bring a human element to it,” Dale Choi,
the founder of Independent Mongolian Metals & Mining Research,
said yesterday. “These people are going to be unhappy. They
might start talking about their plight to the government or the
media. So it escalates the tensions.”
Rio, the world’s second-biggest mining company, controls
Oyu Tolgoi through its Turquoise Hill Resources unit, which owns
66 percent of the mine. The government of Mongolia holds the
rest. The operation employed about 13,500 people at the end of
June, London-based Rio said yesterday in an e-mailed statement.
On Aug. 12, Turquoise Hill said funding and development of
the mine’s underground expansion would be delayed until
“matters can be resolved with the Mongolian government and a
new timetable has been agreed.”
The Oyu Tolgoi partners said yesterday that “the
shareholders are fully committed to resolving the issues so the
underground development can resume.”

For Related News and Information:
Mongolia Studying IPO of Stake in $6.6 Billion Rio Copper Mine
NXTW NSN MR9G9R6K50XU <GO>
Rio Delays $5.1 Billion Mine Expansion Pending Mongolia Approval
NXTW NSN MQPHW36S9746 <GO>
Oyu Tolgoi CEO Said to Step Down in November After Term Ends
NXTW NSN MQGKLI6S9728 <GO>
Mongolia News: NI MONGOL <GO>

–Editors: Amanda Jordan, Tony Barrett

To contact the reporters on this story:
Michael Kohn in Ulaanbaatar at +65-6212-1000 or
mkohn5@bloomberg.net;
Jesse Riseborough in London at +44-20-3216-4198 or
jriseborough@bloomberg.net

To contact the editors responsible for this story:
Jason Rogers at +65-6231-3673 or
jrogers73@bloomberg.net;
Amanda Jordan at +44-20-7673-2144 or
ajordan11@bloomberg.net

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Saranchimeg Enkhee
Saranchimeg Enkhee

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