The Government of Mongolia may cancel and replace the development and financial plan for the country’s vast Oyu Tolgoi copper-gold mine, Canada’s Turquoise Hill (TSX, NYSE: TRQ) said on Monday.
The Rio Tinto-controlled company said Mongolian authorities are dissatisfied with the top miner’s plans. They are particularly concerned about the costs of the expansion, recently updated to $6.75 billion, about $1.5 billion higher than its original estimate.
Mongolia believes the significant cost increase has eroded the economic benefits it expected to receive from the Oyu Tolgoi mine, Turquoise Hill said.
Shares in the company dropped to their lowest in a month on the news, down 21.4% in New York to $11.38 and more than 24% in Toronto to C$13.88 by 10:50 am EST. That leaves the miner with a market cap of almost C$2.99 billion (about $2.33bn).
Rio Tinto (ASX, LON, NYSE: RIO) had in 2019 flagged stability risks associated with the original project design, which translated into as much as an additional $1.9 billion cost and a 30-month delay.