Rio Tinto’s $5-billion Expansion Continues Despite Swiss Probe

Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO) continues to move forward at its Oyu Tolgoi copper-gold mine despite an investigation by Swiss officials. 

Switzerland’s Office of the Attorney General is currently looking into allegations that Rio Tinto paid bribes related to the project’s development.

The office has also begun criminal proceedings on suspicions of bribery and money laundering against a former Mongolian finance minister.

However, Rio Tinto CEO Jean-Sebastien Jacques told Bloomberg TV over the weekend that the company has yet to receive any word on the investigation from the attorney general’s office.

“We have had no contact whatsoever. We have not been engaged, either ourselves or Turquoise Hill, by the Swiss authorities,” Jacques said.

Oyu Tolgoi is a joint venture between the government of Mongolia (34 percent) and Turquoise Hill Resources (TSX:TRQ) (66 percent) that began production in 2013. Rio Tinto is Turquoise Hill’s primary shareholder at 51-percent ownership, and is currently managing the Mongolian project.

Rio Tinto announced in 2016 that it, along with the project’s partners, would be implementing a $5.3-billion investment in Oyu Tolgoi to develop an underground mine.

A press release from the company claims that by 2027, when the underground mine is expected to be fully up and running, production rates will reach up to 500,000 tonnes of copper per year. That is compared to the mine’s current annual output of 175,000 to 200,000 tonnes.

Even though the investigation into Rio Tinto is ongoing, Jacques said that development of the underground mine is moving along smoothly. “The project is progressing very, very well and is already providing significant benefit to the Mongolian economy.”

Earlier this month, Turquoise Hill publicly announced that it had received a request from the Mongolian Anti-Corruption Authority to “provide financial information relating to Oyu Tolgoi.”

The announcement states that the request is part of an investigation behind a possible abuse of power by authorized officials during Oyu Tolgoi’s 2009 investment negotiation.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.