Oyu Tolgoi renegotiating a long-term sales contract, Turquoise

August 15 03:15 2013 Print This Article

Metal Bulletin PLC 2013-08-14

Oyu Tolgoi renegotiating a long-term sales contract, Turquoise Hill says

By Shivani Singh
Singapore 14-Aug-2013 06:35:00
Mongolia’s Oyu Tolgoi copper-gold project is in talks with a customer to
renegotiate a long-term sales contract, comprising 5% of production, Metal
Bulletin understands.

“OT is in discussions with a customer related to the production conditions of
the customer’s contract not meeting the contracted deadline,” Tony Shaffer,
Turquoise Hill Resources head of corporate communications & media relations,
said in an email to Metal Bulletin on Wednesday August 14.

Contracts for 70% production are enforceable and sales under those contracts
have started, Shaffer said.

Oyu Tolgoi had signed long-term sales contracts for 75% of copper concentrate
production over the first three to six years of production, the company had
said in its results statement on Monday August 12. A further contract was
subsequently entered into for up to 25% of production.

These contracts were conditional upon the Oyu Tolgoi mine achieving ore
throughput of over 70% for 14 consecutive days and the project satisfied this
production milestone in July 2013.

The concentrator is now consistently achieving throughput rates above 80% of
design capacity, the company has said.

The Oyu Tolgoi mine, which started first shipment on July 9, will
progressively ramp up during the second half of 2013 and is expected to
produce between 75,000 and 85,000 tonnes of copper in concentrates for the
year. The mine is expected to reach full capacity in the second half of 2013.

As of June 30, 2013, Oyu Tolgoi held 50,200 tonnes of copper concentrate in
inventory.

Concentrate inventory will build to the equivalent of four to eight weeks of
production with shipments of finished product matching production rates by the
end of 2013, when up to 36 truck convoys are expected to leave the mine site
on a weekly basis, the company said.

The Mongolian government has a 34% stake in Oyu Tolgoi and Turquoise Hill, a
unit of Rio Tinto, holds the rest.

Talks between Rio Tinto and the Mongolian government over the $4-billion
project financing of Oyu Tolgoi’s next phase of development continue,
Turquoise Hill said on Monday.

Turquoise Hill’s primary operation is its interest in the Oyu Tolgoi mine.
Other assets include a 58% interest in Mongolian coal miner SouthGobi
Resources and a 57% interest in copper-gold miner Inova Resources, formerly
Ivanhoe Australia.

Shivani Singh
shivani.singh@metalbulletinasia.comTwitter: @ShivaniSingh_MB

Copyright (c) Metal Bulletin PLC. All rights reserved.
-0- Aug/14/2013 05:56 GMT

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Saranchimeg Enkhee
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