A company in Mongolia controlled by the mining group Rio Tinto $RIO (-2,02 %)
$RIO (-2,05 %) controlled company in Mongolia has asked local law enforcement authorities to help with an internal investigation into allegations of corruption and unethical behavior at the giant Oyu Tolgoi copper mine.
The investigation is the latest twist in the saga surrounding the development and mining of one of the world's largest copper and gold deposits in the southern Gobi Desert, about 80 kilometers north of the border with China.
"We are aware of the allegations involving procurement-related activities," Oyu Tolgoi LLC announced. The company is "conducting a comprehensive internal investigation" and has "sought cooperation with law enforcement authorities".
The company could not comment beyond that as the investigation is still ongoing.
Oyu Tolgoi is 66 percent owned by Rio Tinto, with the Mongolian government holding the remaining shares. Rio Tinto is managing the mining project, which is set to become the fourth largest copper mine in the world by 2030. The project is at the heart of the group's plans to expand and diversify its portfolio away from iron ore, the steel component that currently generates the majority of Rio Tinto's revenue. Increasing copper production is a priority for many large mining groups, as the metal is needed in large quantities for the construction of electric cars, renewable energy and data centers.
Rio Tinto, the world's second-largest mining company by market value, has invested billions of dollars in the underground expansion of the Oyu Tolgoi mine and expects production to increase by more than 50 percent this year. According to the mining company, more than 80 percent of Oyu Tolgoi's total value lies deep underground.
The development of the mine, which began open pit operations in 2011, has been hampered by delays, cost overruns and complicated negotiations with the Mongolian government, including a multi-year dispute over taxes.
In June, Rio Tinto agreed to pay $138.75 million to settle a US class action lawsuit alleging that the company concealed problems with the underground expansion. The company agreed to the settlement to avoid the uncertainty of continued litigation and denies any wrongdoing, according to court documents.
Earlier this year, Oyu Tolgoi stated that "false and defamatory allegations" had been made in some media and online platforms regarding its procurement processes. In February, the company described its procurement processes as transparent and fully compliant with Mongolian laws and regulations in a statement on its website.
"No single person has unilateral decision-making power over procurement, and our operations are regularly audited by national and international bodies," Oyu Tolgoi stated there.