10th Aug 2021 08:47
(Alliance News) - A review of Rio Tinto PLC's Oyu Tolgoi project found that geological issues were not the cause of delays and cost overruns, as the Anglo-Australian miner initially claimed, the Financial Times reported on Monday.
The independent report - peer reviewed by two leading mining engineers - found that ground conditions were not a major factor behind delays and overspending in the USD6.75 billion expansion of the Oyu Tolgoi copper project in Mongolia.
In July 2019, Rio Tinto had announced delays of 16 to 30 months and additional costs of USD1.2 billion to USD1.9 billion at the copper mine.
The company said the delay was due to difficult ground conditions, which required a re-examination of the project's design and schedule. First production at the mine is now expected by October 2022.
However, according to the FT, the recent report found "no evidence that rock conditions were significantly different than anticipated."
Instead the review said delays were largely caused by key "enabling" infrastructure at Oyu Tolgoi, including two 1 kilometre deep shafts limited the number of underground crews that could be deployed to complete excavation work, the newspaper said.
The report claimed that neither Rio Tinto or its contractors had: "suitably experienced senior personnel to lead a project of this complexity and magnitude".
"The end result was a project falling behind schedule within the first six months and continuing to fall further and further behind as time progressed," the report added.
https://www.ft.com/content/443e889e-9b91-475c-b41f-28e519b93683
The UK's financial watchdog will investigate the miner over claims that it withheld disclosures regarding Oyu Tolgoi from September 2018 to July 2019.
Meanwhile, Rio Tinto continues to discuss the development schedule at the copper project with the Mongolian government as the pair attempt to settle a new financing agreement.
In April, the Mongolian government was 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 in January.
Shares in Rio Tinto were down 0.5% at 6,060.00 pence each in London early Tuesday.
By Scarlett Butler; [email protected]
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