Rio’s Oyu Tolgoi mine to start copper exports on July 9 -Mongolia
Rio Tinto will start exporting copper from the US$6.2 billion (HK$48.1 billion) Oyu Tolgoi mine in Mongolia on Tuesday, the Mongolian government said, but it was not clear if the miner would be able to repatriate sales revenue from the mine.
The unlocking of ore shipments is key for Rio to secure a further US$4 billion (HK$31.0 billion) in project funding for the expansion of the mine, which will significantly boost the Anglo-Australian miner’s copper portfolio and ease its dependence on iron ore.
Rio Tinto, operator of the mine, declined to comment, citing the number of false starts. First exports from the mine have been delayed twice since the initial planned date of June 14.
Metals traders have been closely watching whether Rio gets official approval to export concentrate from Oyu Tolgoi amid a shortfall in shipments from the Grasberg mine in Indonesia, run by Freeport McMoRan Copper & Gold.
“The one great problem regarding Oyu Tolgoi’s contract for the export of concentrate is no longer. First export will be on July 9th,” Mongolia Mining Minister Davaajav Gankhuyag tweeted in Mongolian.
A spokesman for the mining ministry confirmed the statement.
Gankhuyag has said the delay in first exports was because the government and Rio were in disagreement on the arrangement of revenue generated from Oyu Tolgoi as well as the disclosure of the mine’s US$8 billion (HK$62.0 billion) sales agreements.
Mongolia wants the sales revenues to be deposited in local banks while Rio wanted to repatriate the earnings.
It remains unclear if Rio would be able to send the revenues offshore.
“We note that an arrangement has been reached on division of sales revenues between Mongolian accounts of Oyu Tolgoi LLC and its other registered accounts (presumably overseas),” Dale Choi, an analyst at Mongolian Metals & Mining Research, said in a note on Monday.
“Official announcement would be a significant first step for Mongolia to prevent itself from developing a precarious financial and economic situation it would find itself in case of further prolonged delay.”
Rio subsidiary Turquoise Hill Resources owns a 66 per cent stake in the mine, with the Mongolian government owning the remainder.
Rio’s Australian shares were down 2.1 per cent on Monday afternoon. The broad Australian stock market was down 0.5 per cent.