Mongolia Prime Minister Ousted, Rio Tinto Hopes for Change

Mongolian Prime Minister Altankhuyag Norov was ousted last week, and Rio Tinto (NYSE:RIO) is hoping that the change could mean good news for its Oyu Tolgoi project in the country. The company has been conducting ongoing negotiations with the Mongolian government surrounding tax and cost disputes, and the discussions are holding up further development at the project.

As quoted in the publication:

Commitments from lenders for $4.2 billion needed to help fund the development expired after a Sept. 30 deadline to reach an agreement was missed, Rio-controlled unit Turquoise Hill Resources Ltd. said last month in a statement. The company wrote down the value of the mine by $4.7 billion in March.

Oyu Tolgoi, located about 80 kilometers (50 miles) north of the Chinese border, will contribute about a third of Mongolia’s economy when in full operation and will be the world’s third-biggest copper mine, according to Turquoise Hill.

Rio may need to consider a writedown of the mine if delays to the expansion continue, according to CLSA Asia-Pacific Markets. The project had a book value of $4.96 billion at the end of June, Rio said in an August filing.

Rio Tinto CEO, Sam Walsh, told Bloomberg:

I’m hoping it will be a positive sign. Certainly there are a lot of things that are indicating that people want the project to proceed.

Click here to read the full Bloomberg article.