By Alex MacDonald
LONDON--A majority-owned unit of Rio Tinto PLC (RIO) said Monday
that customers of its massive Mongolian Oyu Tolgoi copper and gold
project have secured Chinese customs approval to receive copper
concentrate in China, thus paving the way for the mine's owners to
start earning revenue from the $6.2 billion project.
Turquoise Hill Resources Ltd. (TRQ.T), a majority owned unit of
Rio Tinto and 66% owner of Oyu Tolgoi, said in a statement that
"Oyu Tolgoi's customers have been engaged with Chinese customs
officials and have received the necessary approvals allowing them
to collect purchased concentrate." The withdrawal of copper from
the warehouse, which began on Saturday, means the company and the
Mongolian government, which owns the remaining 34% stake in the
mine, will now be able to record revenue from copper concentrate
exports that began in July.
The Oyu Tolgoi mine began exporting copper concentrate to China
for the first time in July following hiccups in securing export
permits from the Mongolian government. Oyu Tolgoi's customers in
China then faced further delays when they weren't able to secure
Chinese customs approval for copper imported from Oyu Tolgoi. This
prevented Oyu Tolgoi's shareholders from recording any sales from
copper exports on their books.
Turquoise Hill said it now expects to record revenue from those
copper exports in line with their withdrawal from the warehouse,
which is located in China near the Mongolian-Chinese border.
It added that Oyu Tolgoi's production wasn't negatively affected
as a result of the Chinese customs approval delay. "Shipments of
concentrate are expected to be aligned with production rates by the
end of 2013," the company said.
Oyu Tolgoi, which is operated by Rio Tinto, produced 160,000
metric tons of copper concentrate and shipped approximately 38,000
tons of concentrate to the bonded warehouse in China between the
time it began its first shipments in July and Sept. 18.
At full output, Oyu Tolgoi is set to produce an average of
450,000 tons of copper and 330,000 ounces of gold a year, as well
as silver and molybdenum. The International Monetary Fund has
estimated that the mine will generate up to one-third of Mongolia's
gross domestic product when it reaches full production, which had
been expected in 2021.
Write to Alex MacDonald at alex.macdonald@wsj.com