Own Rio Tinto (ASX:RIO) shares? Why the CEO met with the Mongolian Prime Minister this week

What happened in the meeting?

| More on:
Two business people face off across the boardroom table.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Rio Tinto Limited (ASX: RIO) share price could be one to watch in the near term. This comes as the mining giant’s CEO, Jakob Stausholm, attended a meeting with Mongolia’s Prime Minister Oyun-Erdene Luvsannamsrain.

At the closing bell on Friday, Rio Tinto shares finished down 2.25% to $94.46 apiece.

What happened?

In an effort to smooth tensions over Rio Tinto’s Oyu Tolgoi copper and gold mine, the 2 heads met together this week. The project has suffered major setbacks and cost overruns which have resulted in production delays.

Construction on the mine commenced back in 2010, touted as one of the world’s safest and most sustainable mines. The company leveraged new technologies and mechanical equipment to carry out more efficient mining operations.

First production was originally forecast to begin in late 2020, but geotechnical difficulties and COVID-19 pushed this date back. Rescheduled for October 2022, Rio Tinto has again moved the timeline to January 2023 because of cost blowouts.

The Mongolian government threatened to tear up the 2009 investment agreement, in which it has a considerable stake. An independent review rejected Rio Tinto’s explanation for the project’s delays and climbing costs.

Canadian-listed Turquoise Hill Resources, the other major shareholder in the project, advised it needed US$3.6 billion in further funding. Rio Tinto holds a 50.8% interest in the mineral exploration and development company.

However, the Mongolian government’s stance is that Rio Tinto should cover any additional costs.

Some believe that concessions could be made to the Mongolian government to reset relations and complete the project.

Once online, the mine will produce around 560,000 tonne of copper resources per year at full operational capacity. This is forecasted to occur sometime no earlier than 2025.

Should everything run according to plan, the Oyu Tolgoi project could be the world’s fourth-largest copper mine by 2030.

Rio Tinto share price summary

Over the past 12 months, Rio Tinto shares have fallen 8% despite hitting a 52-week low of $87.28 in mid-November. When looking at 2021 alone, its shares have plummeted by almost 20%.

Rio Tinto commands a market capitalisation of roughly $35.87 billion with approximately 371.22 million shares outstanding.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Resources Shares

A smiling woman holds an arm in the air in triumph while also holding a graphic of a fully-charged battery in her other hand representing the Pilbara Minerals share price
Resources Shares

The Pilbara Minerals share price has powered 28% higher in a month. What’s been happening?

Lithium has been on a wild ride recently.

Read more »

A white EV car and an electric vehicle pump with green highlighted swirls representing ASX lithium shares
Resources Shares

Could this new development boost Allkem shares heading into 2023?

ASX lithium shares have been among the strongest performers over the past 12 months.

Read more »

A worker stands over a large copper coil in a factory
Resources Shares

What’s so good about copper anyway?

Why are investors going mad for copper?

Read more »

Two mining workers in orange high vis vests walk and talk at a mining site
Resources Shares

Why Lynas shares and one other ASX 200 rare earths miner are in this expert’s ‘core basket’

Rare earths stocks have been getting attention as demand continues to soar for the group of metals.

Read more »

Miner with thumbs up at mine
Resources Shares

‘Phenomenal start’: Here’s why ASX gold share Tempus Resources just rocketed 53%

Tempus Resources shares are on fire today.

Read more »

A girl runs along with her kite flying high in the sky.
Share Gainers

3 ASX mining shares rocketing by more than 20% today

Up we go in another day of double-digit gains for the ASX metals and mining equity bucket.

Read more »

A man in trendy clothing sits on a bench in a shopping mall looking at his phone with interest and a surprised look on his face.
Resources Shares

Could this development further energise ASX lithium shares in FY23?

ASX lithium shares are soaring today with the Lake Resources share price up 27% this afternoon.

Read more »

share price ASX mining shares buy coal miner thumbs up
Earnings Results

Coronado share price jumps on 3,200% earnings surge

The company's half-year EBITDA eclipsed even its highest-ever full-year figure.

Read more »