Rio Tinto Reached Agreement with Mongolia on Oyu Tolgoi Expansion
Oyu Tolgoi will purchase electricity from the Mongolian grid, instead of its earlier proposal to construct a new coal-fired power plant to supply electricity.
SEATTLE (Scrap Monster): Rio Tinto announced that it has reached an agreement with the Mongolian government towards ending the prolonged dispute over the $7 billion expansion project at Oyu Tolgoi copper-gold mining project.
According to the terms of the agreement, Turquoise Hill, which operates the mine, will waive the debt of around $2.4 billion owed to it by the Mongolian government. Also, it has been agreed to start operations at the underground portions of the mine, with first production expected in the initial half of 2023. Also, Turquoise Hill will be paid for the expansion with cash, rescheduling of existing debt repayments and prepaid sales of copper concentrate, it noted.
Oyu Tolgoi will purchase electricity from the Mongolian grid, instead of its earlier proposal to construct a new coal-fired power plant to supply electricity. Rio Tinto will help to add renewable power to the grid.
Commenting on the development, Jakob Stausholm, Chief Executive, Rio Tinto said that it comes as a major relief for the company and that it would mark a huge step forward for the company. The deal offers an elegant solution to the complex issues that had strained its relations with the Mongolian government for a long period. Meantime, Mongolian government pointed out that the deal demonstrates the country’s capability to work together with investors in a sustainable manner.
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