Rio Tinto Reaches New Financial Agreement with Mongolia for $18 Billion Copper Mine

The revised deal reduces management fees and financing costs as both sides seek to strengthen one of the world's largest copper mining projects.

Global mining giant Rio Tinto and the Government of Mongolia have agreed on new financial terms for the US$18 billion Oyu Tolgoi copper mine, one of the world's largest copper mining projects, in a move aimed at improving the project's long-term economic benefits for both parties.

Under the revised agreement, Rio Tinto will reduce its management fees by 50% and lower the interest rate charged on Mongolia's shareholder loan by 2.5 percentage points. The changes follow years of negotiations after Mongolian officials argued that the previous financial arrangements provided insufficient returns for the country despite its 34% ownership stake in the project.

Located in Mongolia's South Gobi Desert, the Oyu Tolgoi mine is expected to become one of the world's largest copper producers, with annual output projected to reach around 500,000 metric tonnes once full underground operations are achieved. Copper is regarded as a critical mineral for electric vehicles, renewable energy systems and global artificial intelligence infrastructure, making the project strategically important for the energy transition.

Despite the revised financial terms, several issues remain unresolved. Mongolia has yet to receive dividend payments from its stake in the mine, with current projections suggesting distributions may not begin until around 2037, significantly later than originally anticipated because of construction delays and rising project costs.

The project also continues to face a US$450 million tax dispute between Rio Tinto and Mongolian authorities relating to accounting practices during 2021 and 2022. Both sides have indicated they intend to continue discussions to resolve the outstanding issues while maintaining progress on mine development.

Industry analysts say the revised agreement represents an important step toward strengthening cooperation between governments and multinational mining companies at a time when global demand for copper is expected to rise sharply. As investment in electric vehicles, renewable energy and artificial intelligence accelerates, securing reliable supplies of critical minerals has become an increasing priority for economies worldwide.