Rio Tinto investee Oyu Tolgoi enters agreements with three EPC firms

Rio Tinto announced on Thursday that Oyu Tolgoi, an entity in which it has a 33.5% indirect ownership interest, had entered into agreements with three Chinese engineering, procurement and construction (EPC) contractors, each of which would potentially create a smaller related party transaction for the purposes of the UK Listing Rules.

The FTSE 100 firm said that, as part of a competitive tender process, each contractor had been requested to submit a bid for the engineering, design and construction of a power station for Oyu Tolgoi in Mongolia.

It said the agreement entered into with each bidder provided that, where a bidder submits a conforming bid and it was not accepted by Oyu Tolgoi, Oyu Tolgoi would pay $0.5m to that bidder to offset the costs of preparing that bid and the early engineering and design work packs.

“The contractors are China Machinery Engineering Corporation, Harbin Electric International Company Limited and Power Construction Corporation of China,” Rio Tinto confirmed.

“Each of these contractors is a state-owned enterprise ultimately owned by the People's Republic of China.

“As such, each of these entities is treated as a related party of the company for the purposes of the UK Listing Rules.”

On 24 November last year, Rio Tinto announced an extension of the Channar Mining joint venture with China's Sinosteel Corporation, which was a smaller related-party transaction.

“Due to the 12 month aggregation provisions within the UK Listing Rules, the arrangements entered into by Oyu Tolgoi are therefore also smaller related party transactions,” the board explained.