Work on the $5 billion Oyu Tolgoi project could resume soon thanks to an agreement for a multi billion dollar expansion at the mine reached between Rio Tinto and the government of Mongolia.
In a statement the two sides agreed on a financing plan for the next phase which “addresses the key outstanding shareholder issues and sets out an agreed basis for the funding of the project.”
Construction of the copper project that includes open pit and underground operations was stopped as Rio Tinto and the government clashed on issues of taxes and the costs of building the underground portion of the mine that Rio Tinto said will unlock 80 percent of the copper at the deposit. It is the largest foreign investment in Mongolia, The New York Times reported.
The delays came at difficult time for Rio Tinto which also struggled with slipping commodity prices. Mongolia’s new prime minister stepped in to resolve the issues.
“Oyu Tolgoi is a world-class copper-gold asset and its further development is of great economic significance for Mongolia,” the prime minister, Chimediin Saikhanbileg, said in a statement.
Turquoise Hill Resources, a majority-owned subsidiary of Rio Tinto, owns 66 percent of Oyu Tolgoi, while the Mongolian government owns the remaining 34 percent.
The first phase open pit mine has been producing cooper since 2013.
Before development of the much larger underground mine can begin, Rio Tinto said the project will need to finalize financing, conduct a feasibility study and secure all necessary permits.
“Our joint announcement today reflects tremendous leadership by all parties and paves the way for work to resume on the underground development, which is expected to deliver significant value to shareholders,” Jean-Sébastien Jacques, chief executive of Rio Tinto’s copper and coal group, said in a statement.