Rio Tinto ’s Oyu Tolgoi mine in Mongolia has axed 1700 workers.
Bloomberg TV Mongolia read a letter from contractor Redpath Mongolia LLC, which hires workers at the $6.6 billion copper mine.
Employees at Redpath were given their termination letters, which stated its decision from Oyu Tolgoi LLC’s board of directors.
The letter verified the job cuts but did not say how many would be cut, Bloomberg reports.
One Redpath employee said workers received the news on Monday and have been given 45 days’ notice.
Oyu Tolgoi had 11,750 people working there, with Mongolian nationals making up 90 per cent, the SMH reports.
The massive job cuts come amidst months of dispute between Rio and the Mongolian government over revenue distribution from the mine.
Australian Mining reported in April Rio had progressed in its financing talks for the expansion of Oyu Tolgoi.
Rio and the Mongolian government have clashed over cost overruns management control.
Rio owns 66 per cent of the mine, with the Mongolian government owning the rest.
It was reported Australian taxpayers will help Rio fund the copper mine project after Australia’s export credit agency decided it would keep lending to multinational companies.
Turquoise Hill Resources, through which Rio control Oyu Tolgoi, said on Monday funding for the underground mine expansion would be postponed until “matters can be resolved with the Mongolian government and a new timetable has been agreed.”
Three emergency shareholder meetings have already been held this year.
The copper mine venture hit a snag last month as Rio awaited funding grants from the Mongolian government.
Rio said the government informed them the funding for Oyu Tolgoi will need approval from Mongolia’s parliament.
But Prime Minister Norov Altankhuyag said last week Rio did not need to do this for the development's package.
The Mongolian government had guaranteed in April it could reach an agreement with Rio in a matter of a “few weeks”, as per the deputy minister of economic development Ochirbat Chuluunbat.
Delays of mine have already affected Mongolia's economy, with foreign direct investment dropping by 43 per cent.