Diversified major Rio Tinto said on Friday that its Mongolian unit, Oyu Tolgoi, had initiated a formal international arbitration process to seek a definitive resolution with regard to a dispute with that country’s tax authority.
The Mongolia Tax Authority issued Rio Tinto with a tax assessment for about $155-million in January 2018, relating to an audit on taxes imposed and paid by Oyu Tolgoi between 2013 and 2015.
Oyu Tolgoi only paid an amount of $4.8-million to settle what it accepted were unpaid taxes, fines and penalties.
“We have worked diligently with the government and tax office representatives in Mongolia to find a mutually acceptable settlement and came to the conclusion that arbitration is the best way forward to resolve this issue,” commented Rio Tinto copper and diamonds CEO Arnaud Soirat.
Canada’s Turquoise Hill, which is majority owned by Rio Tinto, said that it remained of the opinion that all taxes and charges required to be paid under the investment agreement, the amended and restated shareholders’ agreement, the underground mine development and financing plan and Mongolian law had been paid.
Rio Tinto and Mongolia recently reached an agreement on investment agreements governing Oyu Tolgoi.
The Oyu Tolgoi mine is owned by the government of Mongolia (34%) and Turquoise Hill (66%, of which Rio Tinto owns 51%). Rio Tinto is the operator of the project.