Rio expects Mongolia’s approval for Oyu Tolgoi exports soon
Anglo-Australian mining giant Rio Tinto is expecting to ship gold and copper from its Oyu Tolgoi mine in Mongolia in the coming few weeks, after months of negotiations with the government over the future operations of the mine.
Rio Tinto chief executive Sam Walsh told shareholders at an annual meeting in Sydney on Thursday that the company expects to obtain approvals from the Government of Mongolia over the next two weeks to ship materials out of the Oyu Tolgoi mine.
The approvals include use of railway lines and shipping schedules.
The company was aiming towards commercial production at the mine by the end of June 2013 but now expects to commence shipping material to customers by that time, Walsh said.
Exports from Oyu Tolgoi will help Rio offset a drop in revenues from its copper business in the US amid pressures to cut costs and divest non-core assets.
Rio Tinto's subsidiary Turquoise Hill Resources owns a 66% stake in Oyu Tolgoi, while the government owns the remaining stake.
Rio and the government have been at loggerheads concerning issues over the costs of the mine.
A technical report, commissioned by Turquoise Hill in March, shows that the development of the second phase of the mine will require a budget of $5.1bn, a cost increase of $1.4bn.
According to the government, the cost of the project has risen 40% over budget, however, Turquoise Hill says that the estimates increased due to a 30% surge in direct capital costs associated with the building of an underground mine.
The mine is currently operating under a temporary budget on a month-to-month basis, with funds being provided by Rio Tinto.
Image: Rio Tinto's subsidiary Turquoise Hill owns a 66% stake in Oyu Tolgoi mine, while the remaining stake in the project is owned by the government. Photo: File image.