Anglo-Australian miner Rio Tinto says the underground expansion of its flagship giant copper and gold mine, Oyu Tolgoi, in Mongolia may require an additional $1.9bn on top of the existing costs of $5.3bn, “Bloomberg Daybreak: Asia” has reported.
The development comes as the world’s second biggest iron ore miner kept its full-year guidance unchanged after shipping more iron ore than expected in the second quarter of 2019. Oyu Tolgoi mine, located in the Gobi desert, is seen as a barometer for Mongolia's investment climate. Its underground expansion could deliver long-term gains for the country.
Oyu Tolgoi is jointly owned by Mongolia’s government (34%) and Turquoise Hill (66%), in which Rio Tinto has a 51% stake. The mine has proven and probable reserves of 1.45bn tonnes.
Rio said in October initial production from the upgraded Oyu Tolgoi project would be delayed.
The company noted that the underground development schedule at Oyu Tolgoi would be revised due to a delay in the completion of a shaft and ground conditions. The expansion was originally set to see its first output by around 2020, but that is now not likely to occur until the second half of 2021. This is set to hurt the mine’s free cash flow.
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