26th Jun 2014 10:52
LONDON (Alliance News) - Rio Tinto PLC's majority owned Turquoise Hill Resources Ltd said Thursday that it has filed a dispute notice with the Mongolian government, which contests a recent audit calling for possible unpaid taxes and penalties from the USD6.2 billion Oyu Tolgoi copper site.
The mining giant sees the Oyu Tolgoi site as a key copper driver in its portfolio of assets. In fact, an estimate by the International Monetary Fund estimates that the site could generate up to a third of Mongolia's gross domestic product by the time it reaches full production in 2021.
Turquoise Hill said the filing was made after it received the audit report on Monday, which claimed unpaid taxes, penalties and disallowed entitlements associated with the initial development of the Oyu Tolgoi site.
"We strongly disagree with the claims in the audit report," Turquoise Hill Chief Executive Kay Priestly said in a statement on Monday, stating that it has paid all taxes and charges as required under the investment agreement and Mongolian law.
On Thursday, Turquoise Hill said the notice of dispute filing it has made is the first step in the process of resolving the dispute and includes a 60-day negotiation period, after which it may refer the situation to an international arbitration if unresolved.
As a result of the process, it said further investment in the site has to be delayed including the development of an underground feasibility study.
A spokesman for Rio Tinto said that the company is "supportive of the move."
Oyu Tolgoi has been hit by a range of delays and negotiations among Rio Tinto, Turquoise Hill and the government.
Rio Tinto shares were up 1.3% to 3,137.00 pence on Thursday.
By Tom McIvor; [email protected]; @TomMcIvor1
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