More delay at Oyu Tolgoi as financing deadline lapses

MINING.com Editor | October 5, 2014 | 9:55 pm Base Metals Precious Metals Top Companies Asia Copper Gold 
Rio Tinto to axe hundreds of jobs at Oyu Tolgoi mine

The underground portion of the Oyu Tolgoi copper-gold complex is no closer to fruition, after the parties behind the US$5 billion operation let a Sept. 30 financing deadline lapse without applying for an extension.

“Based on the progress of negotiations, the shareholders will consider the timing of requesting an extension of the commitments from the project-finance lenders in due course,” Turquoise Hill Resources (NYSE:TRQ), the operator of the mine and a Rio Tinto (LON, ASX, NYSE:RIO) subsidiary, said in a statement.  “No requests have been made to extend the lender commitments, although there is ongoing engagements with the financial institutions.”

The massive open pit mine began operating last year, but an underground expansion was put on hold shortly after, as the Mongolian government became concerned that cost overruns would cut into profits.

Talks between the world’s second largest mining company and Mongolia on the expansion and reworking of the initial 2009 deal that first triggered an investment boom in the country, have dragged on for more than a year.

Turquoise Hill and the Mongolian government are arguing over investment frameworks, taxes, and compensation for a US$2 billion cost over-run on the first phase of the mine, The Australian reported on Saturday. The Mongolian government, which owns 34 percent of the mine, and Turquoise Hill got an extension until Sept. 30 after a $3.6-billion financing package expired in March.

For 2014, Oyu Tolgoi —located 80 kilometers north of the Chinese border— is targeting production of 150,000 to 175,000 tonnes of copper in concentrates and 700,000 to 750,000 ounces of gold in concentrates. But after phase 2 – the underground portion – the mine in the southern Gobi desert could produce more than 1.2 billion pounds of copper, 650,000 ounces of gold and 3 million ounces of silver each year.

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Comments

  • philtetlow

    Why mix the copper quantity unit measurement – either use lbs or tonnes, not both.

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