TORONTO – Mongolia wants more tax revenue under a revised deal to expand Rio Tinto's Oyu Tolgoi copper-gold mine rather than a larger ownership stake in the project, a person with direct knowledge of the government's thinking told Reuters on Monday, as the two sides bid to resolve a long-running standoff over the development.
On Sunday, the Financial Times reported Ulaanbaatar is seeking agreement with Rio to terminate a deal to expand the mine and replace it with a new pact that offers better terms.
“We obviously would like to have more tax revenues," the person said, declining to be identified owing to the sensitivity of the issue.
The mine is one of the world's largest-known copper and gold deposits. The government holds a 34% stake in the $6.75 billion project, while Rio Tinto-controlled Turquoise Hill owns the rest.
Ulaanbaatar has previously told Rio it was concerned that the economic benefits of developing the mine have been eroded due to the significant increase in costs.
Under current plans, Ulaanbaatar won't receive dividends until 2051 while Oyu Tolgoi won't pay "meaningful" corporate income tax, the person said. "That's really concerning."
Rio did not immediately return a request for comment.
The miner on its website says Oyu Tolgoi has paid the government more than $2.7-billion in taxes, fees and other payments since 2010.
The source said government representatives met last week with Bold Baatar, a Mongolian national whose recent appointment as head of Rio's copper operations is widely seen as an attempt to improve government relations and make progress in talks on the project.
Baatar has vowed to discuss the plans with the new government and work towards a resolution.
The underground expansion will push annual production to nearly 500,000 tonnes per year, making it among the world’s biggest copper mines