11th Jan 2021 20:18
(Alliance News) - Rio Tinto PLC-controlled Turquoise Hill Resources Ltd on Monday said Mongolia's government is mulling whether the Oyu Tolgoi project should proceed over cost concerns.
A press release from Turquoise Hill stated that the government has advised FTSE 100-listed Rio Tinto that it is "dissatisfied" with the results of the definitive estimate, which were announced in December.
Last month, Rio Tinto set out plans to get its Oyu Tolgoi copper and gold mine in Mongolia to sustainable underground production by October 2022, spending USD6.75 billion to do so.
Rio said the development of the underground project at Oyu Tolgoi, which has suffered a series of setbacks and delays, will unlock the most valuable part of the mine, which by 2030 is expected to be the fourth largest copper mine in the world. Oyu Tolgoi is expected to produce 480,000 tonnes of copper per year on average between 2028 and 2036 from both the open pit and underground, compared to just 146,300 tonnes from the open pit in 2019.
The Mongolian government is concerned that "the significant increase in the development costs" of the Oyu Tolgoi project has eroded the economic benefits it anticipated to receive, Turquoise Hill said.
"The government of Mongolia has indicated that if the Oyu Tolgoi project is not economically beneficial to the country, it would be necessary to review and evaluate whether it can proceed," said Turquoise Hill.
The Mongolian government holds a 34% interest in the project, and Turquiose Hill the remaining 66%. Rio Tinto holds a 50.8% stake in Turquoise Hill Resources.
Shares in Rio Tinto closed down 1.8% at 6,194.00 pence in London on Monday.
By Lucy Heming;Â [email protected]
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