Rio Tinto is confident that disputes which have stalled the construction of its giant copper and gold Oyu Tolgoi mine in Mongolia can be resolved.
The nearly US$7 billion project in the remote Gobi Desert has been plagued by conflict between Rio and its major partner, the Mongolian Government, over project financing, cost overruns, and other issues.
Head of communications for Oyu Tolgoi, Houston Spencer, told the Mongolian Mining Summit in Perth that while there had been “challenges”, the disputes were being worked through by the parties.
“Oyu Tolgoi’s investors, Turquoise Hill and Rio Tinto, continue discussions with the Government of Mongolia, discussions on issues that must be overcome as part of the further development of OT’s underground mine,” he said.
Mr Spencer is also a Rio Tinto representative on the Oyu Tolgoi executive committee.
Oyu Tolgoi’s board is made up of representatives from the Mongolian Government, Rio Tinto, and Turquoise Hill Resources, which is part-owned by Rio.
Construction work was suspended in July at the underground mine because of the ongoing disputes, resulting in 1,700 workers being laid off.
Mr Spencer says a collaborative solution is required to sort out outstanding issues so work can resume at the underground mine.
“I understand why many stakeholders want to see that day come quickly,” he said.
“But speed cannot drive this process. We have to resolve these issues properly creating solutions that last,” he told the conference.
Production began in July but the first delivery of copper concentrate was held up by delays at Chinese customs.
That issue has been resolved and the first deliveries to customers were made in mid October.
Oyu Tolgoi’s chairman, Batsukh Galsan, played down the disputes in a presentation to the conference.
“We have faced many issues to achieve what OT is today: a world class open pit and concentrator facility with on going exports,” he said.
Mr Galsan also played down a big slump in foreign investment following laws which differentiated between local and foreign investors.
That legislation has been superseded by a new investment law passed earlier this year by the Mongolian Parliament.
Mr Galsan was Mongolia’s Ambassador to Australia from 2005 to 2010.
The partners are also waiting for project financing of $US 4 – 6 billion to be finalised ahead of a December deadline.
The mine has produced more than 160,000 tonnes of copper concentrate and is forecast to produce up to 85,000 tonnes of copper by the end of the year.
Construction of the mine started in 2009 and exploration began at the site about 20 years ago.
The mine is expected to contribute to one third of Mongolia’s economic development and under the investment agreement, the Mongolian government will get a majority of the profits.
More than 8,000 people are employed on the project and 90 per cent of them are Mongolians.