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Rio Tinto on brink of exporting from Oyu Tolgoi copper mine

Keywords: Tags  Rio Tinto, copper, Oyu Tolgoi, copper exports, Bingham Canyon, Freeport-McMoRan, shivani singh


SINGAPORE — Rio Tinto Plc may start exporting from the $6.6-billion Oyu Tolgoi copper mine in Mongolia as soon as June 14.

"We have always said the first shipment will be in June and now we are (aiming for) June 14 subject to government approval and some paperwork that still needs to be done," a source at Oyu Tolgoi told AMM sister publication Metal Bulletin without giving details on the pending approvals. "It seems positive (for a June 14 start)."

The Turquoise Hill unit of Rio Tinto has been in continuing talks with the Mongolian government on a range of issues, including project development and costs, operating budget, project financing, management fees and governance. The Mongolian government has a 34-percent stake in Oyu Tolgoi.

The source said the first shipment will go to Chinese smelters but noted that "we are also negotiating with the international trading community." He declined to name the smelters or traders.

Oyu Tolgoi has entered into sales contracts for 75 percent of concentrate production from the project on international terms, Rio Tinto had said in January (amm.com, Jan. 15). "In addition to the signed contracts, Oyu Tolgoi has committed in principle to sell up to 25 percent of concentrate production on international terms to smelters in Inner Mongolia for the first 10 years, subject to the conclusion of detailed sales contracts."

Production from the Oyu Tolgoi project may partially offset the loss of copper output caused by a wall slide at Rio Tinto’s Bingham Canyon Mine in Utah (amm.com, April 11) and an accident at Freeport-McMoRan Copper & Gold Inc.’s Grasberg Mine in Indonesia (amm.com, June 4).

Oyu Tolgoi is a crucial project for Mongolia as it is expected to account for 35 percent of the country’s gross domestic product when it is fully operational in 2020. Over its life, the Oyu Tolgoi project is expected to produce 425,000 tonnes of copper and 460,000 ounces of gold per year.

The start of Oyu Tolgoi is a critical test for future foreign investment in the Mongolian mining sector, which faced huge challenges last year when the government proposed an overhaul of the country’s minerals law and sought a bigger stake in Oyu Tolgoi.

A version of this article was first published by AMM sister publication Metal Bulletin.


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