Mongolia is concerned about Rio Tinto’s management of Oyu Tolgoi

Mongolia is concerned Rio tinto Government officials told CNBC about the management of the Oyu Tolgoi copper and gold mines in the Gobi Desert in the southern part of the country.

“We are concerned about transparency, and we are also concerned about whether the mine is operating efficiently.” Solongoo Bayarsaikhan, Deputy Secretary of the Cabinet Secretariat of the Mongolian Government, said on CNBC’s “Squawbox Asia.. “

NS Open pit mining The underground mining project is being jointly developed by the government, which owns approximately 34% of Oyu Tolgoi, and Rio Tinto’s Canadian subsidiary. Turquoise hill resource It has a 66% stake.

British Australian miners own a nearly 51% stake in Turquoise Hill Resources.

What’s wrong?

Underground expansion of Oyu Tolgoi has been hampered by delays, development issues and cost overruns for years.

Rio Tinto and Turquoise Hill Resources Signed development and financing plans with Mongolia In 2015, which provided the basis for funding the project, but six years later, production has not yet begun in a sustainable way.

When the underground expansion is complete, Oyu Tolgoi is expected to produce more than 500,000 tonnes of copper annually.

Initial predictions are that the mine From 2021 onwards, copper will be able to be produced sustainably..

However, in December last year, Rio Tinto postponed the timeline, stating that “sustainable production” is scheduled to begin in October 2022. Underground expansion costs $ 6.75 billion, Higher than previous estimates.

Friday, Rio Tinto Delayed that prediction again He said sustainable production would occur “by January 2023.”

The company cited the impact of Covid-19 and open issues regarding cave exploration. He warned that this year’s additional Mongolian Covid limit to address community communication was set to add an estimated $ 140 million to the budget as of the end of September.

Rio Tinto blamed difficult ground conditions delays and rising costs, but this year’s independent review contradicted that explanation.

On September 22, 2018, workers will pass through a tunnel in an underground mining project at the Oyu Tolgoi Copper Gold Mine, co-owned by the Rio Tinto Group’s Turquoise Hill Resource Unit and the state-owned Eldenes Oyu Tolgoi in Khanbogd, Mongolia.

Taylor Wademan | Bloomberg | Getty Images

A report from the Independent Consulting Group commissioned by Rio Tinto’s partners on the project concluded that poor management was the main reason for the mine’s underground expansion being delayed by almost two years and exceeding its budget by $ 1.45 billion. .. Reported Financial Times..

Mongolia reacts

Rio tinto Reportedly disputed the report’s findings In a letter to the Mongolian Minister of Justice, the review stated that it was not fully aware of the full impact of weaker conditions that forced the mine to be redesigned.

“We asked Rio Tinto to explain the contradiction between the independent review report and Rio Tinto’s position,” Bayar Saikan told CNBC on Friday.

“The letter is pleased with the answers to our specific questions and specific concerns about why there are cost overruns and planned delays, and why the independent review reports have very different conclusions. It wasn’t a good thing, “she said. “Rio Tinto didn’t provide enough answers.”

Bayarsaikhan explained that the Mongolian government wants to find “mutually beneficial solutions” and avoid further surprises in terms of further cost increases and delays.

Mongolia is concerned about Rio Tinto’s management of Oyu Tolgoi

Source link Mongolia is concerned about Rio Tinto’s management of Oyu Tolgoi

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