US judge set to approve Rio Tinto's $138.75m Mongolia mine settlement
A US judge on Wednesday said he was ready to approve Rio Tinto's agreement to pay $138.75-million to settle a lawsuit that accused the Anglo-Australian mining giant of defrauding investors by concealing problems with its $7-billion underground expansion of the Oyu Tolgoi copper and gold mine in Mongolia.
Rio Tinto had reached a preliminary settlement with shareholders of the former Montreal-based Turquoise Hill Resources in June, pending approval from Manhattan-based US District Judge Lewis Liman.
Liman at a hearing on Wednesday said he was ready to approve the settlement, but did not sign off on it yet because he was waiting for the shareholders' lawyers to inform him of what they planned to do with any funds left after initial distributions.
Rio Tinto did not admit wrongdoing in agreeing to settle.
The lawsuit sought damages on behalf of Turquoise Hill shareholders between July 2018 and July 2019, when that company, then listed in Toronto, was majority-owned by Rio Tinto.
Shareholders were led by funds advised by Chicago-based Pentwater Capital Management.
Pentwater said in a September 10 court filing that the settlement amount represented between 34% and 43% of the damages it believed it could prove at trial, describing it as reasonable given the risk of continued litigation.
Turquoise Hill had been a single-asset company owning 66% of the Oyu Tolgoi mine, with Mongolia's government owning 34%.
Pentwater accused Rio Tinto and Turquoise Hill of fraudulently assuring that the Oyu Tolgoi mine was "on plan" and "on budget," even as it was falling up to two-and-a-half years behind schedule and running as much as $1.9-billion over budget.
Rio announced the possible $1.9-billion overrun in 2019, and projected total capital expenditures of $6.5-billion to $7.2-billion.
In 2022, Rio Tinto bought the 49% of Turquoise Hill it did not already own for $3.3 billion, fully integrating the mine into its copper portfolio.
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