(Sharecast News) - Rio Tinto has resolved its long-running dispute with the Mongolian government over the $6.93bn expansion project for the company's Oyu Tolgoi copper-gold mining project.
Mongolia owns 34% of Oyu Tolgoi, which is one of the world's largest-known copper and gold deposits. Rio controls the remainder through its 51% stake in Toronto-listed Turquoise Hill Resources and operates the mine.
As part of the deal, Turquoise Hill will waive $2.4bn in debt owed to it by the Mongolian government. Operations will also soon start on the underground portion of the project, with first production expected in the first half of 2023.
The expansion will be paid for with cash, the rescheduling of existing debt repayments, and prepaid sales of copper concentrate to Turquoise Hill.
Rio said the project would buy electricity from the Mongolian grid once it is able to meet supply. Rio said it will work to help add renewable power to the grid. In the meantime, the government extended an agreement to import power from China into 2023.
"We will also explore additional opportunities to decarbonise the OT operations, including sourcing renewable power," said Rio Chief Executive Jakob Stausholm.
The deal marks a positive development for the Anglo-Australian mining giant, which was hit last week after Serbia rejected its proposed lithium mine.
Rio Tinto (RIO)17 May 2024 16:55
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