Rio Tinto Settles Oyu Tolgoi Investor Lawsuit for $138.75 Million

Rio Tinto (NYSE:RIO) has agreed to pay $138.75 million to settle a class-action lawsuit alleging it misled investors about delays and cost overruns in the $7 billion underground expansion of the Oyu Tolgoi copper-gold mine in Mongolia. The lawsuit, filed in the U.S. District Court in Manhattan, accused the Anglo-Australian mining giant of securities fraud between July 2018 and July 2019, during which it controlled a majority stake in Turquoise Hill Resources (NYSE:TRQ).

Investors, led by funds managed by Pentwater Capital Management, claimed Rio Tinto and Turquoise Hill knowingly concealed serious issues at the Oyu Tolgoi site while continuing to publicly assert that the project remained on schedule and within budget. In reality, the expansion was up to 2.5 years behind and as much as $1.9 billion over budget.

Former Rio Tinto CEO Jean-Sebastien Jacques, who resigned in 2021, was also named in the lawsuit but has denied any wrongdoing. All defendants settled without admitting liability, citing the high costs and uncertainty of ongoing litigation.

The lawsuit was supported in part by whistleblower Richard Bowley, a former employee at the mine, who alleged the company was aware of project delays well before disclosing them in 2019. That year, Rio Tinto revised its capital expenditure estimate to between $6.5 billion and $7.2 billion.

In 2022, Rio Tinto acquired the remaining 49% of Turquoise Hill it did not already own for $3.3 billion, fully consolidating the Oyu Tolgoi mine.

Shareholder attorneys are expected to request up to $18 million in legal fees and $2.6 million in expenses from the settlement. The agreement awaits approval from a federal judge.