www.businessweek.com October 01, 2013
Mongolia and Rio Tinto Group (RIO) resolved 15 of 30 points of dispute that stalled the expansion of their $6.6 billion Oyu Tolgoi copper mine, a Mongolian board member of the venture said.
Negotiations will resume in Ulaanbaatar on Oct. 7, Ganzorig Temuulen, one of three Mongolian nationals on the Oyu Tolgoi LLC board, said at a press conference in the Mongolian capital today. His comments follow a meeting between the shareholders in London.
Progress at Oyu Tolgoi has stalled on disagreements that include the financing of the mine’s underground expansion, which is expected to cost about $5.1 billion. Mongolia, which controls 34 percent, claims cost overruns on the open-pit operation are delaying future dividends and wants the mine’s extension funded with revenue from copper sales until the dispute is resolved. That’s been a subject of debate with Rio, which has sought to raise debt to fund the mine’s second phase.
London-based Rio, the world’s second-biggest mining company by market value, manages the venture through its 51 percent stake in Turquoise Hill Resources Ltd. (TRQ), which owns 66 percent of the mine. Rio in July decided to delay work on the expansion until wrangles with the government on funding and other issues are resolved. While open-pit work continues, the dispute has led to the suspension of underground construction and the layoff of about 1,700 workers.
The mine, located 80 kilometers (50 miles) north of the Chinese border, is forecast to account for about a third of Mongolia’s economy.
To contact the reporters on this story: Elisabeth Behrmann in Sydney at firstname.lastname@example.org; Michael Kohn in Ulaanbaatar at email@example.com