- Summary:
- Rio Tinto stock could be in for further declines as Pentwater, a US-based hedge fund files a class-action lawsuit against the company.
Rio Tinto is facing a class-action lawsuit after claims that it knew about the delays of a large copper mining project in Mongolia for at least 9 months but failed to make the necessary disclosures.
The Financial Times is reporting that Pentwater Capital Management, a US-based hedge fund, has accused the mining company of hiding the real causes of the delays in the Oyu Tolgoi project. The hedge fund claims that Rio Tinto failed to disclose this to shareholders, and also deceived investors with repeated claims that the project was within budget and on track for completion by the initial deadline.
The mine in question is the major growth project of Rio Tinto and is being operated by a Canadian subsidiary company as a 66% shareholding in a partnership with the Mongolian government.
Pentwater Capital Management owns 9% of Turquoise Hill, the Canadian subsidiary of Rio Tinto that manages the majority shareholding in the mine. Pentwater has filed a class-action lawsuit in the US District Court for New York’s Southern District.
Rio Tinto’s shares have been on the decline since the beginning of 2021.
Technical Levels to Watch
Today’s drop on the news of the class action lawsuit violates the 5349 support line, (9 December 2020 low), allowing the bears a chance at continuing the downtrend. This action requires a confirmation of the breakdown of the 5349 support. This would open the pathway for a move lower towards 5157, with 4991 serving as additional support.
On the other hand, a bounce from the current support brings 5510 into the picture as potential resistance, with 5799 and 5975 acting as potential targets to the north.
Rio Tinto; Daily Chart
