Global mining group Rio Tinto is embroiled in a legal battle with a former employee who says it was aware of problems at a key copper project months before they were disclosed to investors.

An’ unfair dismissal case against Richard Bowley, who worked for Rio’s copper business between 2017 and 2019 as head of strategic projects in Mongolia, threatens to expose Rio to accusations that it was slow to reveal key information on the underground expansion of the giant Oyu Tolgoi mine in the Gobi desert.

The Oyu Tolgoi expansion is Rio’s most important growth project and will increase its production of copper, at a time when the shift to renewable energy is driving growing demand for the metal for use in electric vehicles and wind turbines.

The project is closely associated with the company’s chief executive Jean-Sébastien Jacques, who put together financing for it when he ran the company’s copper business.

In documents filed with a UK employment tribunal, Mr Bowley claims he first alerted senior executives to problems at the mine in February 2018.

That was followed by a second warning — to an HR executive — in July 2018 that the mine was $300m over budget and a year behind schedule. Yet, in a presentation to US investors on October 2, 2018, the head of Rio’s copper business Arnaud Soirat said the project was “on budget and on schedule”.

Two weeks later in quarterly production update, Rio announced there would be a nine-month delay to its “first sustainable production” because of ground conditions and other operational problems but it said the project remained on budget.

Mr Bowley continued to express his concerns to senior executives about the project, which was being managed by Rio’s Growth & Innovation unit, rather than its copper division.

In one email, sent just weeks after Mr Soirat’s October 2018 presentation, Mr Bowley told his local manager there would be a “12-18 month delay in the underground project, with substantial cost implications”. He also outlined his concerns to board members at Rio.

Mr Bowley, whose job included assessing potential issues with the underground mine and suggesting solutions, continued to warn senior executives of problems at the project until January 2019, when Rio launched an investigation and compliance review.

In March 2019, Mr Bowley claims his contract was terminated with “immediate effect”. Four months later, Rio announced the project was between $1.2bn and $1.9bn over budget and running 16-30 months behind schedule.

In a statement, Rio said it had consistently complied with its disclosure obligations in relation to the Oyu Tolgoi underground development and “any claim otherwise is completely misleading”.

It added: “Rio Tinto retained Baker McKenzie to independently review these allegations, including that Rio Tinto had misled the market regarding cost overruns and delays, which were found to be unsubstantiated.”

“As to our former employee’s Employment Tribunal claim, Rio Tinto considers this to be entirely without merit and will vigorously defend it.”

In its court filings, Rio argued the UK Employment Tribunal did not have jurisdiction to consider Mr Bowley’s claim because he was based in Mongolia and employed by its Singapore business unit.

A judge will decide on March 31 whether the case can be heard in the UK.

Rio is also fighting civil fraud charges in the US over the timing of market disclosures relating to a coal deal in Mozambique.

Published Date:2020-02-18