Rio Tinto has reached a deal with the Mongolian Government for its $5.4bn expansion of the underground mine at Oyu Tolgoi, capping two years of negotiations.
The company has signed the mine development and financing plan alongside the government and its majority-owned subsidiary Turquoise Hill Resources, which owns most of the mine.
Following the agreement, the focus will now be on finalising project finance, a feasibility study, and obtaining all necessary permits for the mine development to go ahead.
Rio Tinto Copper and Coal chief executive Jean-Sébastien Jacques said: "Our joint announcement reflects tremendous leadership by all parties and paves the way for work to resume on the underground development, which is expected to deliver significant value to shareholders.
"The resolution of the outstanding issues reinforces the principles of the investment agreement signed in 2009, which underpinned the $6bn invested in Oyu Tolgoi to date, and provides a clear and stable framework for the future."
According to Rio Tinto, the construction of the first phase of the open-pit Oyu Tolgoi mine was completed on schedule in less than two years.
The mine shipped one million tonnes of copper concentrate in March 2015.
Turquoise Hill Resources chief executive officer Jeffery Tygesen said: "The signing of this agreement is the culmination of extensive work by Oyu Tolgoi’s shareholders over the last year.
"The agreement outlines a pathway to restarting development of the underground mine, and builds on the value that has already been unlocked for Mongolia from the operation of the open-pit mine which is providing jobs and other economic contributions as well as best practices in mining standards."
The Oyu Tolgoi project is 34% owned by the Government of Mongolia and the remaining 66% is owned by Turquoise Hill Resources.
Image: Oyu Tolgoi project, Copper and Gold Mine in South Gobi. Photo: courtesy of Brücke-Osteuropa.