A U.S. District Judge dismissed several claims in a lawsuit alleging that Rio Tinto and its former CEO Jean-Sebastien Jacques defrauded investors by concealing issues related to the development of the Oyu Tolgoi copper and gold mine in Mongolia.
Judge Lewis Liman of Manhattan federal court addressed claims that Rio Tinto had knowingly misled investors about missing a crucial deadline for the “draw bell” blasting, a key milestone in the mine’s development. The lawsuit also accused Jacques of hiding delays and cost overruns associated with the project. However, in a 40-page ruling, Judge Liman dismissed the claim against Rio Tinto, noting that it was Turquoise Hill Resources, which owned 66% of Oyu Tolgoi (with the Mongolian government holding the remaining stake), that had made public statements indicating the draw bell schedule was on track.
Liman explained that Rio Tinto could not be held liable for Turquoise Hill’s statement, even though Rio Tinto was the majority owner of Turquoise Hill, through its affiliate. The judge also dismissed claims that Jacques intended to defraud shareholders when he made statements about the mine’s progress starting in October 2018. According to Liman, Jacques’ statements at that time reflected his belief that the company’s announced timeline was still valid. However, claims against Jacques for earlier statements were allowed to proceed, as shareholders had sufficiently alleged that he was aware of the delays when the class period began in July 2018.
The lawsuit, led by funds managed by Pentwater Capital Management, seeks damages on behalf of shareholders of Turquoise Hill from July 17, 2018, to July 31, 2019.
Pentwater’s legal team did not immediately respond to requests for comment, nor did lawyers representing Rio Tinto and Jacques.
This legal development is the latest chapter in the ongoing scrutiny of the Oyu Tolgoi project, which has faced delays and cost overruns, and remains a contentious issue for Rio Tinto and its stakeholders.
