Rio Tinto must face lawsuit in U.S. over Mongolian mine cost overruns

The Rio Tinto emblem is displayed on a customer’s helmet at a borates mine in Boron, California, U.S., November 15, 2019. REUTERS/Patrick T. Fallon/File Photograph/File Photograph

NEW YORK, Sept 6 (Reuters) – A U.S. decide stated Rio Tinto Plc (RIO.L) should face an investor lawsuit accusing the Anglo-Australian mining large of concealing delays and large price overruns at a Mongolian copper and gold mine owned by Turquoise Hill Sources Ltd (TRQ.TO), wherein Rio Tinto has a majority stake.

In a 134-page determination made public on Tuesday, U.S. District Choose Lewis Liman in Manhattan stated funds suggested by Pentwater Capital Administration LP, Turquoise’s largest minority shareholder with a couple of 10% stake, might pursue a proposed class motion on behalf of Turquoise shareholders from July 2018 to July 2019.

The decide dismissed some claims in opposition to Rio Tinto and numerous executives, and all claims in opposition to Montreal-based Turquoise. His determination is dated Sept. 2.

Pentwater accused Rio Tinto and Turquoise of fraudulently assuring that the $5.3 billion Oyu Tolgoi mine was “on plan” and “on price range,” even because it was falling as much as 2-1/2 years delayed and coming in as a lot as $1.9 billion over price range.

Shareholders of Turquoise stated their investments misplaced near three-quarters of their worth as the reality grew to become identified. The shareholders are searching for damages from Rio to recoup their losses.

In letting Chicago-based Pentwater search to carry Rio Tinto accountable for a few of Turquoise’s statements, Liman cited claims that the businesses had an “terribly shut relationship,” and that Rio Tinto had “close to complete management” over the mine.

“Plaintiffs do sufficiently allege that Rio knew of delays or price overruns shortly earlier than the category interval and, as an alternative of attempting to repair them or disclose them to traders, tried to silence those that spoke out about them,” Liman wrote.

Rio Tinto stated Pentwater’s claims had been unfounded and stated it had constantly complied with its disclosure obligations.

“Pentwater’s claims are fully with out advantage, and we’re assured that, when all of the information are thought-about by the court docket, or if crucial by a jury, Pentwater’s claims will likely be rejected,” the miner stated in a response to the court docket determination despatched to Reuters.

Turquoise and its attorneys didn’t instantly reply to requests for remark. Pentwater’s lawyer Salvatore Graziano declined to remark.

Earlier this month, Rio Tinto agreed to pay about $3.3 billion for the 49% of Turquoise it doesn’t already personal. learn extra

Turquoise owns 66% of the Oyu Tolgoi mine, and Mongolia owns the remaining.

In January, Rio Tinto and Mongolia settled an extended dispute over the mine’s financial advantages, in an accord that waived $2.4 billion of debt owed by Mongolia’s authorities. learn extra

The case is In re Turquoise Hill Sources Ltd Securities Litigation, U.S. District Courtroom, Southern District of New York, No. 20-08585.

Reporting by Jonathan Stempel in New York; Further reporting by Praveen Menon in Sydney; Enhancing by Leslie Adler and Christopher Cushing

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