Oyu Tolgoi Copper-Gold Mine Expansion to Go Ahead

SEATTLE (Scrap Monster): The Mongolian government assured that Rio Tinto’s massive $7 billion expansion of its Oyu Tolgoi copper-gold mine will not be stopped.

According to the country’s mining minister, Dolgorsürengiin Sumyaabazar, the project would proceed directly forward. Meantime, the National Security Council will work with the company on improving the investment agreements on the proposed expansion. However, the minister declined to reveal the government’s plans to make the agreement more beneficial for the country.

The parliament announced that it has decided to wrap up the two-year investigation, conditional to comprehensive measures to improve the terms of the contract with respect to both surface-mine and underground phases of the expansion project.

The news comes as a big relief for Rio Tinto. The company had feared that the Mongolian government would engage in a complete renegotiation of the agreement, following the conclusion by the parliamentary working group that Oyu Tolgoi agreement does not benefit Mongolians. The group had observed that the agreement benefits only the foreign side.

ALSO READ: AngloGold Ashanti Halts Guinea Gold Mine Operations

The project has been facing several challenges over the past two years in the form of back taxes and force majeure on account of local protests. Consequently, Rio Tinto had extended the deadline of project completion by 16-30 months, thus delaying the first production by the same time period. Also, it had projected additional costs of around $1.9 billion.

Rio owns 51% out of the two-thirds ownership held by Canada’s Turquoise Hill Resources. The Mongolian government owns one-third of the project.