Oyu Tolgoi Export Startup Back on Track

Rio Tinto officials announced on June 20 that they expected to soon begin export shipments of production from the $6.2-billion Oyu Tolgoi copper-gold mine in Mongolia, after reportedly resolving differences with the government over handling of export revenues from the operation. The media, traders and government officials had earlier been invited to a ceremony at the South Gobi Desert site to witness the first exports to China, according to Reuters. But the event was canceled due to ongoing negotiations between the mine operator and the government.

Oyu Tolgoi said first exports remain on track to begin by the end of Q2 2013. Start-up of the mine—the biggest in the country—is being closely watched by other companies and investors rattled over new regulations and concerns raised by the Ulanbataar government over Oyu Tolgoi.

The success of the project is vital for Mongolia, as revenue from the mine is expected to comprise 30% of Mongolia’s GDP by 2020. It is also a crucial growth source for operator Rio Tinto as it aims to ease its dependence on its iron ore business and cast-off small or unprofitable assets.

Rio plans to expand the underground mine, with a final decision pending in 2014. The expansion hinges on finalizing $4 billion in project financing, also expected soon. Rio Tinto’s majorityowned Turquoise Hill Resources owns 66% of the project, while the Mongolian government owns the remainder.

The exact nature of future investment in the country’s mining industry appeared to become more complicated later in June, when the nation’s incumbent president was re-elected. Mongolia’s share of income from mining was a topic of high interest during the pre-election campaign, with President Tsakhia Elbegdorj’s opponents claiming that the government should do a better job of distributing wealth derived from its natural resources to its people. The Elbegdorj administration itself has lately veered in the direction of increased resource nationalism, spooking potential investors.

As featured in Womp 2013 Vol 07 - www.womp-int.com