Ulaanbataar gives go ahead to Oyu Tolgoi shipments

By bne IntelliNews July 8, 2013

bne -

The first copper shipments from Mongolia's Oyu Tolgoi copper gold mine are set start this week, after the government finally gave developer Rio Tinto the nod.

Mining Minister Davaajav Gankhuyag wrote on his Twitter feed that the first shipments would start on July 9. "There is no significant problem with the Oyu Tolgoi mineral export contract," he added.

The news follows repeated delays in the start of shipments from Oyu Tolgoi, which is one of the world's largest copper-gold deposits. The news indicates an upturn in relations between Ulaanbataar and Rio Tinto. The British/Australian conglomerate holds a majority in the mine through subsidiary Turquoise Hill Resources, but the government has been pushing to enlarge its stake.

Rio Tinto invited journalists to an event marking the first exports from the mine on June 14, but then cancelled. The start of shipments was then rescheduled for June 21, but just a day ahead of that date, Rio Tinto announced the plan had been postponed "at the request of the government of Mongolia".

When full-scale production starts at Oyu Tolgoi, the mine is expected to produce an average of 330,000 tonnes of copper and 495,000 ounces of gold per year throughout its first decade of operation. It is predicted that the project could account for up to one third of Mongolia's GDP, and would clearly be transformational for an economy that is already one of the fastest growing in the world.

Recent months have seen an increase in tension between the Mongolian government and Rio Tinto, with unresolved disputes over the growing costs of launching production, and investment plans for the second phase development. However, the re-election of the investor-friendly President Tsakhia Elbegdorj on June 26 offered optimism that progress would soon be seen at both Oyu Tolgoi and other major projects in the country.

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