Rio Tinto, the global mining giant, said on Wednesday that the underground expansion project for the (Oyu Tolgoi) copper and gold mine in Oyu Tolgoi, Mongolia, cost $6.75 billion and that Rio was still at odds with (Turquoise Hill Resources), the turquoise mountain resources company it controlled, over financing the mine.
The Oyu Tolgoi copper and gold deposit project, located in the southern Gobi area of Mongolia, is one of the largest known copper and gold deposits in the world.
The Mongolian government holds a 34 per cent stake in the project, while turquoise mountain, which is controlled by Rio Tinto, holds the rest.
The project was shelved as Mongolia sought a more favourable deal, and the cost of the project rose sharply because of its difficult geological conditions, leaving Rio Tinto and turquoise Mountain at loggerheads over funding for the expansion project.
Rio Tinto said on Wednesday that progress in financing was "limited" and reiterated that it "still believes that all shareholders should contribute proportionately" to the development of the mine.
Rio Tinto said the first phase of the expansion of the underground area would achieve sustainable production by October 2022.
"overall, given the slightly lower capital expenditure, we think the latest news is good for the share price of turquoise Mountain." Orest Wowkodaw, (Scotiabank) analyst at Fengye Bank of Canada, told its clients.
Turquoise Mountain earlier estimated the expansion cost of the project at about $6.85 billion. By midday, the company's shares had risen slightly to C $15.13.
Rio Tinto also said that the Oyu Tolgoi project, including open-pit and underground mines, is expected to produce an average of 480000 tonnes of copper a year between 2028 and 2036, compared with 146300 tonnes in 2019.
The Oyu Tolgoi copper and gold mine is expected to become the fourth largest copper mine in the world by 2030, the company said.
The next two phases of the underground mining project are still under study and preliminary planning proposals are expected to be put forward in mid-2021, Rio said.
