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Overview of Lawsuit Dismissal
A U.S. District Judge, Lewis Liman, dismissed some claims in a lawsuit accusing Rio Tinto and its former CEO, Jean-Sebastien Jacques, of defrauding investors. The case relates to delays and cost overruns at the Oyu Tolgoi copper and gold mine in Mongolia, a project worth $5.3 billion.
Allegations and Ruling
The lawsuit, led by Pentwater Capital Management, accused Rio Tinto and Jacques of concealing delays in a key project milestone known as the "draw bell" blasting. However, Judge Liman ruled that Rio Tinto was not liable for the statement regarding the schedule, as it was Turquoise Hill Resources, not Rio Tinto, that confirmed the timeline. Turquoise Hill owned 66% of the Oyu Tolgoi mine, with Mongolia holding the remainder.
Liman also dismissed fraud claims against Jacques, stating that his statements in October 2018 about the mine's timeline appeared to be based on his belief in the accuracy of Rio Tinto's schedule.
Legal Outcome
The judge allowed some claims against Jacques to proceed, as shareholders alleged that he was aware of delays when the class period started in 2018. The lawsuit seeks damages on behalf of Turquoise Hill's shareholders, covering the period from July 17, 2018, to July 31, 2019.
Background on Rio Tinto's Leadership
Jacques, who led Rio Tinto for four years, resigned in March 2021 after facing shareholder pressure due to the company's destruction of Aboriginal rock shelters in Western Australia. Despite the controversy, Rio Tinto was not found to have broken any laws regarding the Juukan Gorge incident.
Case Details
The lawsuit is titled In re Turquoise Hill Resources Ltd Securities Litigation, U.S. District Court, Southern District of New York, No. 20-08585.
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