The problems that have been accumulated between the shareholders of the Oyu tolgoi project, a strategically-important copper-gold deposit, are attracting a serious attention of the society. Among these problems the Mongolian side has focused on six main problems and demands that the Rio Tinto pays the tax in accordance with laws of Mongolia and makes the investment and financial reports transparent. The Mongolian side has a right to control implementation of the investment agreement, so it demands that the investors should provide the government with an opportunity to do a monitoring. Following six problems are asked to the investors.
First, the government of Mongolia demands that the Rio Tinto makes write-down of all additional cost, not reflected in the feasibility study, from the company's financing report. It is also needed to keep the shareholders' dividends ratio in accordance with the agreement within the exploitation term of the deposit, and to give a report on implementation of the feasibility study.
The feasibility study says that the project's investment will be USD 14.6 billion when the shaft starts working, but the investors claim that this sum of money will reach USD 24.4 billion, increasing by 68 percent. The government also wants to know why and on what grounds the investors have added the investments that are already adopted by Mongolia's parliament.
In case of such a cost escalation, the Mongolian side who owns 34 percent of the shares will receive its dividends not by 2019, as the agreement says, but by 2033.
Second, the Rio Tinto did not inform the Mongolian side that the Goldman Sachs Group Inc, who worked for Mongolia's government as consultant on the Oyutolgoi project, is the owner of some number of shares belonging to the Ivanhoe Mines. This action causes the next serious breach of the investment agreement.
Third, as it has been revealed, the Entree Gold company, whose participation, even the name, has not been stipulated whatsoever in the OT project, is the holder of 30 percent of the special license of Oyutolgoi group of deposits. It breaches both the Mongolian laws and the investment agreement, and the government of Mongolia demands that the investors take all measures for making the matter meets Mongolia’s laws and corrects the violation.
Fourth, the management cost to be paid to the management team equals three per cent of the whole investment before production starts and six percent after the production began.
However, this cost is 2 or 2.5 times higher than international standards, therefore the government of Mongolia considers as necessity to make a science-based investigation to this problem and especially wants to know the main factors that increase the cost and to define the proper method for calculating the cost of management service.
Fifth, the government of Mongolia demands that the Rio Tinto Group must carry out activities in accordance with Mongolian laws.
Sixth, the government of Mongolia demands that the "Oyutolgoi" LLC, an affiliated company of the Rio Tinto Group, corrects its violations of laws and of the OT investment agreement. The company has breached the agreement several times and has not been obeying Mongolia's laws.
These facts, violating the Mongolian laws and the investment agreement, have become legal basis to reconsider the agreement. Later, the Rio Tinto has accepted the demands from the Mongolian side and intends to reach a mutual understanding.