The deal marks a positive development for the Anglo-Australian mining giant, which is reeling from Serbia’s recent rejection of its proposed lithium mine as well as local opposition to various projects, including in Guinea and the US.
Currently, the Mongolian Government owns a 34% stake in the OT mine. Turquoise Hill Resources (TRQ), of which Rio Tinto owns 50.8%, holds the remaining 66% interest.
Rio Tinto manages the OT operation, which is one of the world’s largest known copper and gold deposits, on behalf of the owners.
Following the signing of the deal, the OT board approved the start of underground operations at the mine.
The OT board is made up of representatives from Rio Tinto, TRQ and Mongolian state-owned company Erdenes Oyu Tolgoi (EOT).
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Production at the underground mine is planned to start in the first half of next year.
As part of the comprehensive package agreed between the Mongolian Government and OT project owners, TRQ will waive a debt of $2.4bn owed by the government.
Furthermore, the OT board signed a deal to purchase power from the Mongolian grid, under terms already agreed with the government.
Rio Tinto said it will work with the government to assist the expansion of renewable energy generation in support of the Mongolian grid.
Rio Tinto and TRQ also amended the heads of agreement signed last April to ensure appropriate funding for the OT project.
Turquoise Hill Interim CEO Steve Thibeault said: “Following the agreements with the Government of Mongolia and the Amended Heads of Agreement with Rio Tinto being put in place, we now have greater certainty and confidence to complete construction of this once-in-a-generation mine that, when finished, is expected to be one of the largest copper producing mines in the world and a generator of vast economic value and employment in Mongolia and of returns for our shareholders for years to come.”
From 2028 to 2036, OT is expected to produce an average of 500,000 tonnes of copper a year from open pit and underground operations.