UPDATE 1-Mongolia says resolves Rio Tinto copper mine tax dispute

Mon Sep 15, 2014 12:53am EDT
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* Minister says tax bill cut from $130 mln to $30 mln

* Oyu Tolgoi phase II construction to resume in Q1 2015

* All disputes ended, feasibility study approval still needed (Adds detail, background, quotes)

By Terrence Edwards

ULAN BATOR, Sept 15 (Reuters) - A tax dispute that threatened to delay the giant Oyu Tolgoi copper mine being developed in Mongolia by Rio Tinto has been resolved, a government official said on Monday.

The $6.5 billion Oyu Tolgoi project will produce more than 300,000 tonnes of copper concentrate a year once construction is fully completed. It is expected to boost Mongolia's economy by a third by 2020.

But the development has been embroiled in a series of disputes between its two owners, Rio Tinto-subsidiary Turquoise Hill Resources and the Mongolian government.

Mongolia's vice-minister of mining, Oyun Erdenebulgan, told Reuters that the two sides have agreed to cut an outstanding tax bill on the project to $30 million. The authorities had delivered a $130 million bill in June.

"I understand both parties are now working closely and effectively and nobody wants to delay because of this tax issue," he said, adding that the project would resume construction in the first quarter of 2015.   Continued...