Rio Tinto is ready to cut rates on loans to the government of Mongolia to complete the development of a large Oyu Tolgoi copper mine in the Gobi Desert in Mongolia. The new approach comes after relations between Rio Tinto and the government stalled after an independent review rejected Rio Tinto’s explanation of the delays that delayed the project and was estimated to be $ 1.45 billion over budget. …
Long term project
The Oyu Tolgoi mine is home to one of the largest copper and gold deposits in the world. Due to the fact that Oyu Tolgoi plays an important role in the global copper industry, its development is focused on the long term. At the peak productionOyu Tolgoi is expected to produce an average of 480,000 tonnes of copper per year from 2028 to 2036 in both open pit and underground mining. It is expected to become the fourth largest copper mine in the world by 2030.
The mine is a joint venture with the government of Mongolia owning 34% and Turquoise Hill Resources 66%. Rio Tinto owns 50.8% of Turquoise Hill Resources and manages the operation on behalf of the owners. Rio and Turquoise Hill Resources argued in the early months of this year over funding for the mine’s expansion. In April, the companies reached an agreement that eliminated the funding gap required for the project.
Restructuring the property of Oyu Tolgoi
V Financial Times said on Monday that the mining company is ready to cut interest rates on loans to the Mongolian government to finance its share of the cost of building an underground expansion at the mine. In exchange, Rio Tinto is seeking a number of regulatory and budgetary issues and a long-term energy agreement for Oyu Tolgoi so that the company can begin the challenging collapse process known as undercutting and reach its revised production target for October 2022.
In addition to cutting interest rates on government loans, Rio Tinto’s copper division head Bold Baatar and Steve Thibault, head of Turquoise Hill Resources, also said that Rio Tinto is ready to discuss a “fundamental restructuring” of Oyu. Tolgoi’s ownership structure.
In a statement, Rio said it looked forward to further “productive discussions” with the governments of Mongolia and Turquoise Hill to “identify a potential pathway to meet the conditions needed to start” the reductions.
The Mongolian government is reportedly open to seeking solutions to this issue, given the mine’s importance to its public finances.