Rio Tinto's annual meeting in Canada to discuss OT issue
Oyu Tolgoi project may not be sustainable until 2022
1 долоо хоног, 3 өдөр өмнө
Rio Tinto executives announced an urgent meeting in Canada to discuss the Oyu Tolgoi (OT) concerns. The Anglo-Australian mining company Rio Tinto has invested USD 5.3 billion for the underground development of the Oyu Tolgoi project with a plan to produce 550,000 tons of copper per year. However, the project has begun to face some technical difficulties and may not be sustainable until 2022.
The green energy revolution is booming and demand for industrial metals is growing these days. OT is one of Rio Tinto's most important projects as the future trend of copper will continue to grow.
Rio Tinto still moderates the Oyu Tolgoi project, but it does not directly own shares of the deposit. 66 percent of OT's deposit is owned by Canadian mining company Turquoise Hill Resources (TRQ), which is listed on the Toronto Stock Exchange. The remaining 34 percent is owned by the Government of Mongolia. Rio Tinto owns 50.8 percent of the TQR.
At Tuesday’s annual shareholder meeting, SailingStone Capital Partners is planning against the re-election of Turquoise Hill’s four independent directors, which it said have been handpicked by Rio and are not acting in the interest of all shareholders.
“After five years of engagement, we simply do not believe that they are acting in our best interests, and therefore no longer deserve our support,” said SailingStone, which owns a 10.9 percent stake in Turquoise Hill. It wants minority shareholders to have a direct say in the appointment of one independent director to the board. SailingStone said the primary headwind for Turquoise Hill’s poor stock performance has been corporate governance.
The fund also said that attempts to portray the delays at Oyu Tolgoi as being related to “ground conditions” are only part of the story, and Rio’s management of the project has also been a “critical factor”.
“These are not geotechnical issues — these are project management shortcomings,” said SailingStone, citing a statement issued in February by Turquoise Hill that blamed delays sinking a key shaft on “structural, mechanical, piping and electrical installation productivity”.
Rio is overseeing construction of a underground project aimed to lift 550,000 tons annually
Rio Tinto declined to comment but has said it will provide an update on the project in August alongside its interim results. Turquoise Hill said it had enhanced its corporate governance practices in light of feedback from shareholders. It pointed to the appointment of a new chief executive in 2018 who is a direct employee of the company and reports exclusively to the board.