By Rhiannon Hoyle
Rio Tinto agreed to pay $138.75 million to resolve a class-action lawsuit that alleged the company concealed problems during the expansion of a giant copper mine in Mongolia.
The plaintiffs in the lawsuit, led by Pentwater Capital Management, alleged the company misrepresented and omitted information about the expansion of the Oyu Tolgoi mine, which ran years late and nearly $2 billion over budget.
The case was filed in the U.S. District Court for the Southern District of New York in 2020, alleging violations of federal securities laws. The proposed settlement was filed Wednesday and is subject to the court's approval.
Rio Tinto, the world's second-biggest miner by market value, said in emailed remarks that it "welcomes the proposed resolution of this class action on appropriate and reasonable terms."
The company agreed to the settlement without any admission of wrongdoing or liability. Rio Tinto entered the settlement to avoid the uncertainty and expense of continued litigation, according to the court documents.
"Rio Tinto and the individual defendants vigorously deny all allegations of wrongdoing, fault, liability or damages," the company said in the emailed remarks. Rio Tinto's former chief executive, Jean-Sebastien Jacques, who stepped down in 2021, was among the defendants named in the suit.
Pentwater Capital Management couldn't immediately be reached for comment. The court documents said Pentwater agreed to the settlement to lock in an immediate cash benefit, without the risk or delays of ongoing legal action.
Oyu Tolgoi, in Mongolia's Gobi desert, is at the heart of Rio Tinto's plans to expand its copper business, as the miner seeks to play a key role in the world's transition away from fossil fuels to cleaner alternatives. Copper is widely viewed as being essential to growth in electric cars and renewable power, as well as data centers, and Oyu Tolgoi is expected to become one of the world's largest sources of the metal.
Rio Tinto and its partners originally budgeted $5.3 billion for an underground expansion at Oyu Tolgoi in 2016, targeting maiden copper output in 2020. More than 80% of Oyu Tolgoi's total value lies deep underground, the miner said.
In 2018, Rio Tinto said the project was advancing on track. But by mid-2019, Rio Tinto warned the project could be delayed by up to 30 months and cost as much $1.9 billion more than it envisaged. It said it had to revisit its mine plan after finding ground conditions to be more challenging than expected.
At the time, Oyu Tolgoi had a complex ownership structure, with Rio Tinto holding a 34% indirect interest through a majority stake in Canada's Turquoise Hill Resources. It bought out minority shareholders in Turquoise Hill in 2022.
The class-action lawsuit sought damages on behalf of shareholders of Turquoise Hill between July 2018 and July 2019, claiming that Rio Tinto and some executives made material misrepresentations and omissions during that period--allegations the defendants denied.
Rio Tinto, which is now ramping up production from the underground operation, today owns 66% of the Oyu Tolgoi mine, with the remainder owned by the Mongolian government.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
06-19-25 0052ET
