Rio Tinto's relationship with the Mongolian government faces an even bigger test than first thought, with the two of the company's most senior executives in the developing country following the Mongolian Prime Minister's lead by standing down.
Less than 48 hours after Mongolian Prime Minister Norovan Altankhuyag was squeezed out of the top job by a no-confidence vote in parliament, the Rio subsidiary that controls the miner's interests in Mongolia announced that its chief executive and chairman were standing down.
The subsidiary, Toronto-listed Turquoise Hill Resources, announced on Friday that long-serving Rio executive Jeff Tygesen would replace Kay Priestley as chief executive of the subsidiary, which is 50.79 per cent owned by Rio.
Ms Priestley has served just over two years in the role, which has been dominated by conflict with the Mongolian Government over a number of issues, including the cost of building the second stage of the Oyu Tolgoi project and the share of the project that will come back to Mongolian taxpayers.
Ms Priestley's chairman, Dr David Klingner, has also stood down, prompting a complete refresh of the company's executive ranks.
The surprise round of leadership changes within the government and the company could jeopardise the chances of a deal being struck between the parties prior to Christmas.
A debt funding deadline has already been extended twice this year, and there were hopes that a lasting resolution could be solved before the start of 2015.
Turquoise Hill sought to downplay any connection between the departures of both the government and company leaders, saying the changes had been planned for a long time.
"The appointments are the result of an extensive succession planning program that has been underway for several months," the company said in a statement.
Ms Priestley will remain on the board until December 31, when she will be replaced by Dr Craig Stegman, who was working on Rio's Northparkes copper and gold mine in New South Wales until it was sold one year ago.
Oyu Tolgoi is a copper, gold and silver mine which is expected to be the dominant force in the Mongolian company for several decades.
The smaller first stage of the mine is already exporting copper concentrate to Chinese buyers, but the long-awaited second stage of the project is considered to hold the bulk of the project's value.
Source:http://www.theage.com.au/
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