A US district judge is poised to approve Rio Tinto’s $138.75m settlement related to its Oyu Tolgoi mine expansion in Mongolia.
The lawsuit alleged that the Anglo-Australian mining company misled investors by hiding issues related to its $7bn underground expansion project, reported Reuters.
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In June, a preliminary settlement was reached with the shareholders of Montreal-based Turquoise Hill Resources, awaiting approval from US district judge Lewis Liman in Manhattan.
At a recent hearing, Liman expressed his readiness to approve the settlement but did not sign off, awaiting further details on fund distribution from shareholders’ lawyers.
Rio Tinto has not admitted any wrongdoing in the settlement agreement.
The lawsuit sought damages for Turquoise Hill shareholders for the period from July 2018 to July 2019, during which the company was predominantly owned by Rio Tinto.
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By GlobalDataThe shareholders were guided by funds managed by Pentwater Capital Management, a firm based in Chicago.
In a court filing on 10 September, Pentwater stated that the settlement amount accounts for 34–43% of the damages it believed could be substantiated at trial.
It characterised the settlement as reasonable, considering the risks associated with ongoing litigation.
Turquoise Hill, a company focused on a single asset, held a 66% ownership in the Oyu Tolgoi mine, while the Mongolian Government owned the remaining 34%.
Pentwater has accused Rio Tinto and Turquoise Hill of deceiving investors by claiming the Oyu Tolgoi mine was progressing “on plan” and “on budget,” even though there were delays of up to two-and-a-half years and cost overruns of up to $1.9bn.
In 2019, Rio Tinto disclosed the possible cost overrun of $1.9bn, revising total capital expenditures (capex) to between $6.5bn and $7.2bn.
In 2022, Rio Tinto acquired the remaining 49% of Turquoise Hill that it did not previously own for $3.3bn, thereby fully integrating the mine into its copper portfolio.
