The working group in charge of implementing the parliamentary resolution No.92 dated November 21, 2019, titled ‘Ensuring the interests of Mongolia in the exploitation of the Oyu Tolgoi gold-copper mine’ held a press conference today in connection with the findings of the independent investigation on the cost overruns and schedule delays of the underground expansion of the Oyu Tolgoi project.

During the press conference, Minister of Justice and Internal Affairs and Head of the working group Kh.Nyambaatar said, “Initial cost estimates of the Oyu Tolgoi underground development plan were approved at USD 5.3 billion. Unfortunately, this cost was increased by USD 1.4 billion, reaching USD 6.75 billion, and the date when the first underground production to be achieved was extended by 22 months from the first estimation of January 2021. In connection with this, we had independent experts investigate the issue since March and received the final report today.

According to independent experts, it was found during the investigation that the cost overruns and schedules delay were not due to geotechnical conditions. However, Rio Tinto has repeatedly explained the significant increase in cost and delay were caused by the geotechnical conditions that had been worsened.

We have met today with Rio Tinto’s Country Director for Mongolia Kh.Amarjargal and other officials in connection with the findings of the independent experts and asked for an official explanation on the findings and also demanded the immediate start of the underground mining. The Government of Mongolia cannot approve the feasibility study for the underground mine. In other words, we are of the opinion that it is impossible to accept the cost overruns as we have received such a conclusion from the independent experts."

On 16 December 2020, Rio Tinto reported that the Oyu Tolgoi underground project is expected to have cost overruns of USD 1.45 billion and sustainable production from the underground operations will be delayed by 22 months compared to the initial plan of January 2021. Although Rio Tinto and Turquoise Hill Resources Limited explain that the cost overruns and schedule delays are caused by difficult ground conditions, there are various reports and allegations pointing to potential project mismanagement and procurement related issues. These allegations are addressed in the amended claim submitted by certain minority shareholders of Turquoise Hill Resources Limited in the class action against Rio Tinto and Turquoise Hill Resources Limited (including certain executive management members of such companies) filed in the New York court in March 2021.