Rio Tinto Shares Hold Support: Renegotiating Copper Mine Deal

Rio Tinto has confirmed active negotiations with Mongolia over financial terms at the massive Oyu Tolgoi copper mine, with the government demanding lower loan interest rates and removal of management fees in talks that could reshape economics at one of the miner’s most important growth assets.

The discussions centre on a US$12 billion shareholder loan currently charging Mongolia approximately 11.1% effective interest; a rate that has seen interest accumulate to nearly equal the principal and pushed out dividend expectations for the government’s 34% stake until potentially 2040. Mongolia’s prime minister has publicly called the existing deal “unfair” and threatened higher export taxes if Rio does not agree to cut the interest rate below 6% and reduce its annual management fee. The miner, which owns the remaining 66% and operates the project, said in an emailed statement that “we are engaged in active negotiations with the Mongolian government” and that “these discussions reflect our continued commitment to working together to achieve Oyu Tolgoi’s full potential for the benefit of all partners.”

Rio Tinto shares on the ASX have found technical support around the A$150 level through recent volatility, with the stock last trading near that zone as markets digest the renegotiation overhang alongside strong operational performance. The NYSE-listed ADR has held in the low-US$90s range, down modestly from highs earlier in the year but showing resilience given the scale of the Mongolia headline risk. Trading volumes have picked up during pullbacks, suggesting institutional buyers view the current level as attractive relative to Rio’s copper-growth story and 60%-plus dividend payout ratio.

The Oyu Tolgoi talks follow a structured timeline that began with a negotiation protocol signed on 31 October 2025, setting an initial decision target of 31 January 2026 with an option to extend. By early November, both sides had reached an agreement in principle to lower the shareholder loan interest rate, and a meeting between Mongolia’s prime minister and Rio Copper CEO Katie Jackson in mid-November confirmed mutual commitment to resetting both interest and management fees to international benchmarks. On 13 February 2026, the parties agreed to a staged roadmap targeting a final agreement in the first half of 2026, with Rio submitting concrete proposals to cut interest expense and management costs that officials say would directly increase Mongolia’s share of project returns.

The renegotiation comes as Rio delivered solid full-year 2025 results, with copper production reaching 883,000 tonnes; up 11% year-on-year and above the top end of guidance, driven largely by the Oyu Tolgoi underground ramp-up. Total copper-equivalent production rose approximately 8%, while revenue increased 7% to US$57.6 billion and underlying EBITDA climbed 9% to US$25.4 billion. Net earnings fell roughly 14% to US$10.0 billion from US$11.6 billion the prior year, reflecting softer iron ore prices and higher depreciation from growth projects including Oyu Tolgoi. The company maintained its ordinary dividend at US$6.5 billion, sustaining a decade-long track record of paying out at the top end of its 40-60% range.

The Mongolia negotiations carry both financial and precedent risk. The current loan structure, at roughly 3-month SOFR plus 6.5% plus 0.26%, compounds quarterly and has effectively doubled the debt burden over time. A reset to Mongolia’s preferred rate near 6% would reduce Rio’s interest income and cut the net present value of its Oyu Tolgoi cash flows, while eliminating or reducing the management fee would remove another revenue stream. Beyond the direct economics, a visible concession could embolden other host governments; such as Guinea, where Rio is investing heavily in Simandou infrastructure, to push for better terms on their own projects.

The Oyu Tolgoi renegotiation will test Rio’s ability to balance commercial interests with host-government relations in a jurisdiction critical to its copper-growth ambitions. A compromise that preserves operational continuity while making Mongolia’s stake economically viable sooner could clear the political overhang and allow the market to price in the mine’s long-term contribution to global copper supply. A breakdown in talks or a material concession on economics would validate concerns about resource nationalism and weigh on the investment case for Rio’s highest-growth copper asset, even as strong dividends and exposure to energy-transition metals continue to attract long-term holders around the A$150 support zone.