BEIJING, China – Mining giant Rio Tinto on Friday announced the launch of the next stage of a multibillion-dollar gold and copper mine in Mongolia following delays and political tension over revenue sharing and the foreign role in resource industries.
The underground portion of the Oyu Tolgoi mine will go ahead after Rio Tinto, the Mongolian government and another partner agreed on a $5.3 billion investment plan, the Anglo-Australian miner announced. It said production should begin in 2020.
Oyu Tolgoi became a symbol of tense relations between Mongolia and foreign investors. Expansion plans were delayed by disagreements over how to share revenue in the impoverished but resource-rich country between China and Russia.
Critics of government agreements with mining companies complain too little of Mongolia’s mineral wealth benefits the general public.
An open pit mine at Oyu Tolgoi opened in 2013 with an investment of $6.4 billion and employs some 3,000 people.
The latest agreement “is a clear demonstration that the country is back to business,” said the Mongolian prime minister, Chimediin Saikhanbileg, in a statement issued by Rio Tinto. He said the project will be “a catalyst for further investments that will strengthen Mongolia’s economy.”
Minerals make up 94 per cent of Mongolia’s exports. With demand from China weakening as its economy cools, Mongolia’s own growth is forecast to fall below 1 per cent this year.
In March, some 2,000 protesters who criticized foreign mining concessions gathered in the central square in the capital, UlaanBaatar, to demand parliament be dissolved and a new government formed.
Rio Tinto PLC owns 51 per cent of Oyu Tolgoi, the government 34 per cent and a third partner, Turquoise Hill Resources, 15 per cent.
The investment “will transform Oyu Tolgoi into one of the most significant copper mines globally,” said Rio Tinto’s deputy chief executive, Jean-Sebastien Jacques, in a statement. “This is a long-term partnership, built to create mutual benefit.”
Rio Tinto PLC: www.riotinto.com