RIO: Latest evolution of Oyu Tolgoi agreement

Research evidence excerpt

RIO: Latest evolution of Oyu Tolgoi agreement

EQUITY RESEARCH QUICK TAKE

RBC Europe Limited

Ben Davis (Analyst)

Marina Calero (Analyst)

Laura Chan (Analyst)

June 30, 2026

Rio Tinto PLC

Latest evolution of Oyu Tolgoi agreement

LSE: RIO | GBp 7,076.00 | Underperform | Price Target GBp 6,400

Sentiment: Positive

Event

Rio has announced an agreement with the Government of Mongolia to adjust the shareholder loan interest rate for Oyu Tolgoi.

Our view

The latest evolution of Rio's relationship with the Government of Mongolia can be viewed as just about a net positive, given the

rates are still reasonable at SOFRA +4% (previously 6.5%) and will have a credit rate adjustment on a go forward basis. Also there

should hopefully be more good news to come if they can resolve matters relating to the Entrée mine lease areas (OT Mine Schedule

Change: Making the most of a difficult situation) as that will help in mine sequencing.

The concern as ever is how long the current agreement will hold and whether the Government will seek to take a larger share

of the economics at a later point. Given how quickly Mongolia politics changes, this remains a very real risk. Oyu Tolgoi is simply

too large a part of the economy not to be a target, and will continue to be until another large mining project takes its place (none

on the horizon).

Oyu Tolgoi accounts for 13% of our group NAV (45% of copper NAV) and represents 16% of 2026/27e EBITDA.

Rio Tinto has benefitted from a strong flight to quality YTD (-2% since the conflict began) as fears mount around industry costs/

availability of key inputs. However, with exception of aluminium (28% of EBITDA), it is difficult to see further upside in the

commodity basket given the warning signs in the Chinese economy.