Rio Gets Green Light For Mongolian Copper

A rare bit of good news for Rio Tinto (RIO) if reports from Mongolia are accurate – that country’s government is reported to have given the green light for Rio to start shipping copper from its huge $US6.2 billion ($A7.3 billion) Oyu Tolgo copper mine.

Bloomberg reported that the approval was tweeted on Sunday by the country’s mining minister and Reuters reported that Mongolia’s mining ministry has given the green light in a statement yesterday.

The shipments will start from today (July 9) after two attempts to start shipments in June were frustrated by the Mongolian government’s last minute refusal – the country was in the closing weeks of a noisy election campaign.

Rio subsidiary Turquoise Hill Resources owns 66% of the mine with the Mongolian government controlling the rest.

‘‘There is no significant problem with the Oyu Tolgoi mineral export contract,’’ Mines Minister Davaajav Gankhuyag wrote on Sunday in a post on Twitter. ‘‘The first shipments will start on July 9,’’ Bloomberg reported.

Rio Tinto refused to comment yesterday on the report. Perhaps it is waiting until later today to see if the shipments actually are allowed to leave the mine after the two last minute refusals on June 14 and 21.

The postponements last month seemingly were linked to government efforts to make sure revenue from the mine was processed through Mongolian banks.

Rio and the government have been arguing for months now over the cost of the project, finance, tax payments and the number of locals in management of the mine that’s forecast to account for a third of Mongolia’s economy once fully operational.

The Oyu Tolgoi mine has produced more than 40,000 metric tons of copper concentrate, according to a June 28 press release from Turquoise Hill Resources. It will be trucked to China.

Bloomberg reported that the government wanted local banks to handle revenues from the mine’s exports.

Mongolia was also insisting that its representatives on Oyu Tolgoi’s board of directors see Rio Tinto’s sales contracts with Chinese buyers.

The statements yesterday and on Sunday suggest that the issues have been resolved.

The market ignored the news and marked the Rio shares down 2.11% or $1.11 to $51.59 yesterday.

RIO YTD – Rio mute on reported Mongolian Government green light

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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