Rio Tinto's Mongolian copper venture paid $443m to the tax authority in the first half, and reserved the right to dispute it
The sentence is on page 10, inside a paragraph about working capital.
Rio Tinto's half-year results, published Wednesday, disclose that Oyu Tolgoi made a $443 million tax payment during the six months to 30 June. The report says the payment followed an assessment issued by the Mongolian Tax Authority relating to the 2021 and 2022 tax years, and that Oyu Tolgoi reserved its right to dispute the payment. It appears as one of three components of a $1.6bn working capital cash outflow, listed after higher iron ore inventories and normal seasonal movements in amounts due to joint venture partners and employees.
Rio Tinto sets out its own position in the same passage. It says the assessments are inconsistent with the Oyu Tolgoi Investment Agreement and with applicable Mongolian legislation, and that the company is taking relevant steps, including engaging in discussions with the Government of Mongolia, to resolve the matter.
What the document does not say
It does not give the total amount assessed, only the amount paid. It does not say when the assessment was issued, or on what basis. It does not describe the Mongolian Tax Authority's reasoning, and it carries no statement from the authority or from the Government of Mongolia. Money and World did not seek a response from either before publication, and this brief reports Rio Tinto's characterisation of the assessments as Rio Tinto's characterisation, not as a finding.
Nor does the report say when the dispute might be resolved.
Why the mine matters to the result
Oyu Tolgoi is where Rio Tinto's copper growth came from in the half. Copper produced $5.7bn of underlying EBITDA against $3.1bn a year earlier, an increase of 84 percent, and it was the largest single driver of a 28 percent rise in group underlying EBITDA to $14,826m. Mined copper production across the group rose 1 percent over the period. Oyu Tolgoi rose 31 percent year on year, largely offsetting lower production at Kennecott and at Escondida.
Set against the group's cash generation the payment is small. Net cash from operating activities was $9,173m in the half, up 32 percent, and Rio Tinto reported an underlying EBITDA cash conversion rate of 62 percent, two points higher than a year earlier. The company noted the outflow and then noted that it delivered substantially stronger free cash flow anyway.
