Rio Tinto: Has Go Ahead For Mongolian Copper Mine Project
March 31 2010 - 5:57AM
Dow Jones News
Anglo-Australian miner Rio Tinto PLC (RTP) said Wednesday that
the investment agreement for the $4 billion Mongolian Oyu Tolgoi
copper-gold mine has become binding and the project will now move
into its development phase.
Under the investment agreement, the Mongolian government will
own 34% of OT LLC, the license holder of the Oyu Tolgoi project.
The project is being developed by the mine's owner, Canada-based
miner Ivanhoe Mines Ltd (IVN.T) and Rio Tinto, which holds a 22.4%
stake in Ivanhoe and will help develop the project.
The investment agreement marks an important milestone for the
development of the project and for mining investment in the
country, which has some of the world's largest untapped reserves of
coal, copper and other commodities.
Like other mineral-rich but underdeveloped countries, Mongolia
has struggled to attract major investment during the recent global
commodity boom because of an uncertain regulatory environment and
efforts to secure mining profits. The investment agreement includes
key terms regarding a stable operational and tax environment,
provisions dealing with the Government's equity participation and
financing arrangements.
A clear framework for taxation and government involvement for
Oyu Tolgoi is expected to pave the way for billions of dollars of
future investment.
Rio Tinto said the cost to build and commission the mining
complex is expected to be about $4 billion, though the final
projections are yet to be confirmed. A decision to build a
coal-fired power plant for Oyu Tolgoi would require an additional
capital commitment, the miner said.
The mine, located in the South Gobi Desert just north of the
Chinese-Mongolian border, is expected to produce 450,000 metric
tons of copper, about 3% of global supply, and 330,000 troy ounces
of gold, with a mine life of 45 years. Production is expected to
start in 2013 and take five years to reach full output.
Company Web Site: http://www.riotinto.com
-By Alex MacDonald, Dow Jones Newswires; +44 (0)20 7842 9328;
alex.macdonald@dowjones.com (Jeffrey Sparshott and Elisabeth
Behrmann contributed to this article)
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