After years of negotiation with the Mongolian government, Rio Tinto signs an investment agreement for the Oyu Tolgoi mine. One of the key issues for Rio Tinto had been the recently introduced windfall profit tax for mining companies, and the company only invests once the Mongolian government rescinds that law in 2009, reportedly due to lobbying pressure.
Since then, Rio Tinto continues to avoid paying taxes as the ownership structure through which it controls the mine involves multiple subsidiaries in tax havens such as Luxembourg and the Netherlands. This means that both the Mongolian and Canadian government receive only limited taxes from the mine. In 2015, Rio Tinto negotiates an even lower tax rate resulting in Mongolia missing out on around US$230 million in taxes between 2015 and 2020. Rio Tinto thus takes most of the profits from Mongolia’s natural resources while the local population bears the social and environmental costs of the mine.
While Rio Tinto’s own timeline highlights that it is ‘giving the facts on tax,’ its attempts to evade taxes for the Oyu Tolgoi mine are noticeably absent.
Mining Taxes report by SOMO