Mongolia has given 'in principle' approval for the second phase of Rio Tinto's copper and gold mine Oyu Tolgoi, which will result in a $4.2bn investment in the country.
Mongolian Prime Minister Chimediin Saikhanbileg and the Anglo-Australian mining major are said to have reached an agreement and an official announcement is expected once the final details are in place.
With regard to the mine's second phase, the government and Oyu Tolgoi had been holding negotiations for two years.
The country's latest decision to proceed with the project follows a controversial text message referendum backed by Saikhanbileg in early February, where Mongolians voted in support of the stalled foreign investment.
In the referendum, 56.1% of respondents agreed with attracting overseas investment in mega-projects such as Rio Tinto's Oyu Tolgoi mine.
Reuters reported that construction of the second underground phase at the Oyu Tolgoi mine was delayed due to disputes concerning increasing costs at the mine since August 2013.
Opponents saw the controversial vote as a political manouevre by the prime minister, who backs resource development as a way to boost the weakening economy of the country.
The Mongolia Government is also holding discussions and is in the final stages of signing a deal to move Erdenes Tavan Tolgoi coal mine management to China's Shenhua Energy, Japan's Sumitomo and Mongolian Mining subsidiary Energy Resources.
The partners were urged to invest $4bn in expanding the mine's capacity.
Image: Oyu Tolgoi mine in South Gobi. Photo: courtesy of Brücke-Osteuropa.