Lawsuit Against Rio Tinto and Former CEO Dismissed

By Jonathan Stempel
NEW YORK (Reuters) – A U.S. judge has dismissed part of a lawsuit alleging Rio Tinto and its former CEO Jean-Sebastien Jacques defrauded investors regarding the Oyu Tolgoi mine in Mongolia.

On Thursday, U.S. District Judge Lewis Liman ruled on recently added claims that Rio Tinto concealed its knowledge of missing a deadline for "draw bell" blasting, a critical milestone, and that Jacques obscured delays and cost overruns.

In a 40-page ruling, Liman dismissed the claim against Rio Tinto, stating that it was Turquoise Hill Resources, which owns 66% of the mine with Mongolia owning the remainder, that asserted the draw bell schedule was on track. Hence, Rio Tinto wasn't liable for that claim, despite having a majority ownership through an affiliate.

The judge also dismissed claims against Jacques for intending to defraud shareholders since prior statements he made in October 2018 indicated he believed Rio Tinto's timeline was accurate.

However, claims against Jacques from earlier statements remain, as shareholders argued he was aware of delays when the class period started.

The lawsuit, backed by Pentwater Capital Management, is seeking damages for shareholders of Turquoise from July 17, 2018, to July 31, 2019.

Representatives for Pentwater, Rio Tinto, and Jacques did not provide immediate comments.

Jacques led Rio Tinto until March 2021, resigning after shareholder pressure concerning the company’s actions regarding the destruction of culturally important Aboriginal rock shelters in May 2020. Although the company did not violate any laws concerning the sites in Western Australia, the destruction lasted thousands of years of historical evidence.

The case is titled In re Turquoise Hill Resources Ltd Securities Litigation, filed in the U.S. District Court, Southern District of New York, No. 20-08585.