Mongolia has threatened to invalidate the 2009 Oyu Tolgoi copper / gold investment agreement unless all international tax arbitration proceedings initiated by the Government are rejected.

This is proposed by Canada-based Turquoise Hill, which holds a 66 per cent stake in Oyu Tolgoi LLC (OT), Oyu Tolgoi LLC, a Mongolian company that owns the mine.

Turquoise Hill said in a statement that it would oppose the request to bring it into tax arbitration and would defend the counterclaim.

The project, hailed as one of the largest copper / gold deposits, has been plagued by many problems, including development struggles, project delays and soaring costs, which have strained relations between the government and Rio Tinto.

Earlier this year, Mongolia threatened to cancel plans for the development and financing of Oyu Tolgoi underground mines in 2015. Mongolia expressed concern about Rio Tinto's revised budget of $6.75 billion for the expansion of its Oyu Tolgoi mine, noting that rising development costs were eroding any economic benefits it received from mine expansion.

Rio Tinto operates the Oyu Tolgoi mine by holding a majority stake in Turquoise Hill.

From 2028 to 2036, Oyu Tolgoi is expected to produce an average of 480000 tons of copper per year in open-pit and underground mines.