Jan 25 (Reuters) - Rio Tinto Plc and the
Mongolian government said on Tuesday they have reached an
agreement to end a long-running dispute over the $6.93 billion
expansion project for the Oyu Tolgoi copper-gold mining project.
The deal marks a positive development for the
Anglo-Australian mining giant, which is reeling from Serbia's
rejection last week https://www.reuters.com/article/rio-tinto-serbia/analysis-rio-tinto-has-few-options-to-save-serbia-lithium-mine-none-good-idUSKBN2JY1SZ
of its proposed lithium mine as well as local opposition to
projects in Guinea, the United States and elsewhere.
"It's a major relief. It's a huge step forward for us," Rio
Chief Executive Jakob Stausholm told Reuters via phone from
Ulaanbaatar ahead of a flight to the mine site for a
ribbon-cutting ceremony later on Tuesday with Prime Minister
"We are very comfortable with this outcome and, more than
anything, achieving a full reset of the relationship," said
Stausholm, who became CEO last year.
Stausholm visited Mongolia multiple times in recent months
in an attempt to salvage the project amid mounting concerns that
the economic benefits of the project for Mongolians were being
Mongolia owns 34% of Oyu Tolgoi, one of the world's
largest-known copper and gold deposits. Rio controls the rest
through its 51% stake in Toronto-listed Turquoise Hill Resources
Ltd and operates the mine.
As part of the deal, Turquoise Hill will waive $2.4 billion
in debt owed to it by the Mongolian government. Additionally,
operations will soon start on the underground portion of Oyu
Tolgoi, with first production expected in the first half of
The expansion will be paid for with cash, the rescheduling
of existing debt repayments, and prepaid sales of copper
concentrate to Turquoise Hill.
The project also committed to buying electricity from the
Mongolian grid once it is able to meet supply. Rio said it will
work to help add renewable power to the grid. In the meantime,
the government extended an agreement to import power from China
Rio's original 2009 agreement on the mining project called
for the construction of a new coal-fired power plant to supply
electricity. The updated deal does not include that plant and
instead Rio aims to source wind power, the company said.
Stausholm said the deal's multiple terms reflect "an elegant
solution" to the complex issues that had strained relations with
the government. "It is possible to do something for the benefit
of the people of Mongolia and also for the benefit of our
investors," he said.
Luvsannamsrai, Mongolia's prime minister, said the deal
"demonstrates to the world that Mongolia can work together with
investors in a sustainable manner and become a trusted partner."
(Reporting by Ernest Scheyder in Houston and Praveen Menon in
Wellington; Editing by Lisa Shumaker)