Rio Tinto said it would have to cut up to 1,700 jobs in its Mongolian operation, after a more than $5-billion underground expansion of the giant Oyu Tolgoi copper mine was suspended, according to Reuters. The expansion was put on ice last month because the company said the Mongolian government wanted parliament, currently in recess, to approve financing for the project. Mongolian Prime Minister Norov Altankhuyag said last week that Rio Tinto did not need to seek parliamentary approval. The delay marked the latest bump in the road for Rio Tinto at one of its biggest projects—and one of the world’s largest untapped copper deposits—which started exporting from an open-pit mine in July after two last-minute hiccups in securing government approval.
The Mongolian goverment has raised concerns about the costs of the Oyu Tolgoi expansion and the potential that rising expenditures will delay when it starts receiving its share of profits. The government has also complained that locals are not well represented in the management of the project.
A Rio Tinto spokesman said the delay was now being implemented. “There will be up to 1,700 redundancies for our employees and contractors,” he said. “(Oyu Tolgoi is) still an operating business, exporting concentrate to our international customers, and infrastructure projects outside of the underground mine such as the road construction to Tsagaankhad will continue.”
At the end of April, Oyu Tolgoi employed 11,750 people, almost 90% of them Mongolian nationals. Rio Tinto said Oyu Tolgoi shareholders—itself and the government—were still “fully committed” to resolving the issues holding back the underground development.