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

NEW YORK, Sept 6 (Reuters) – A U.S. choose stated Rio Tinto Plc (RIO.L) should face an investor lawsuit accusing the Anglo-Australian mining big of concealing delays and large value overruns at a Mongolian copper and gold mine owned by Turquoise Hill Assets Ltd (TRQ.TO), through which 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 few 10% stake, could pursue a proposed class motion on behalf of Turquoise shareholders from July 2018 to July 2019.

The choose dismissed some claims towards Rio Tinto and numerous executives, and all claims towards 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 finances,” even because it was falling as much as 2-1/2 years not on time and coming in as a lot as $1.9 billion over finances.

Shareholders of Turquoise stated their investments misplaced near three-quarters of their worth as the reality turned recognized. The shareholders are looking for damages from Rio to recoup their losses.

In letting Chicago-based Pentwater search to carry Rio Tinto chargeable 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 whole management” over the mine.

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

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

“Pentwater’s claims are fully with out benefit, and we’re assured that, when all of the info are thought-about by the court docket, or if needed by a jury, Pentwater’s claims will probably 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 Assets Ltd Securities Litigation, U.S. District Court docket, Southern District of New York, No. 20-08585.

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

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