Rio Tinto, developer of Mongolia's Oyu Tolgoi mine, has received commitments from banks of at least $3bn, according to sources. This puts the company on track to raise the $4bn it needs to launch the second phase development of the giant copper-gold deposit, despite continued uncertainty due to disagreements between the company and the government.
Around 10 banks have agreed to lend at least $300m each for the project, unnamed sources told Bloomberg. The commitments are at the top end of the $150-300m range that Rio Tinto said it was planning to request from lenders in its original proposal.
Rio Tinto needs to raise $4bn for the second phase of the project, which includes excavating the underground mine at Oyu Tolgoi. The company had planned to raise $2bn in 12-year loans from commercial banks and a further $2bn from international financial institutions and export credit agencies.
Both the European Bank for Reconstruction and Development and the International Finance Corporation (IFC) have said they will join the project, with the IFC alone expected to provide up to $900m. A decision from the Australian Export Finance and Insurance Corporation (EFIC) on financing is also expected within the next few days.
Commercial banks that have already pledged funds for phase II of Oyu Tolgoi include Australia & New Zealand Banking Group, BNP Paribas, Bank of Tokyo-Mitsubishi UFJ, Commonwealth Bank of Australia, Credit Agricole, ING Groep, Sumitomo Mitsui Banking Corp., Societe Generale and Standard Chartered.
These commitments come despite concerns over an ongoing dispute between Rio Tinto and the Mongolian authorities over Oyu Tolgoi. Ulanbataar has complained that the project costs have gone well beyond earlier spending projections, and Mongolian officials have delayed signing off on the second phase of the project. Local residents and environmental activists are also worried about the impact of both the mine and a planned 750MW power station on the environment.
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