Rio hit by legal action over Oyu Tolgoi

Rio Tinto and two of its executives, outgoing chief Jean-Sebastian Jacques and Arnaud Soirat, are the target of a new class action in a federal court in New York over the Oyu Tolgoi mine.

The Oyu Tolgoi mine site. (Rio Tinto)
The Oyu Tolgoi mine site. (Rio Tinto)

The lawsuit alleges that Rio and the company's subsidiary Turquoise Hill Resources did not tell investors about 'underground stability issues' that raised questions about projected costs, project schedules, and even the design of the mine itself.

The lawsuit also alleges that the cost of expanding Oyu Tolgoi underground would cost a billion dollars more than was suggested, and that Turquoise Hill would not be able to afford it without raising more money.

When the company eventually conceded that delays were likely, its stock price dropped over 12 per cent and trading volume (the number of shares being sold) went through the roof.

The lawsuit was filed by someone named Anthony Franchi, a New Jersey resident who reportedly bought $167 of Turquoise Hill shares in 2019, when he alleges the prices were 'artificially inflated.'

The company stated that it believes the complaint against it is without merit.

More information and analysis on this story will be available in forthcoming newsletters.