Turquoise Hill wins in dispute with Rio Tinto over mine in Mongolia
The temporary relief granted to the Vancouver-based miner Turquoise Hill Resources in the arbitration proceedings against Rio Tinto, prevents the mining giant from restricting Turquoise Hill’s talks on funding and other matters with its fellow stakeholders in Oyu Tolgoi copper-gold-silver mine in Mongolia. Until further notice, Rio Tinto won’t be able to authorize re-profiling negotiations with project lenders in a manner that would render Oyu Tolgoi LLC unable to execute an offering of bonds in 2021, Turquoise Hill noted.
Tensions between the companies have grabbed headlines in recent months. They are at odds over roles and obligations in securing the remaining funding for the underground expansion of the mine. Turquoise Hill, majority owned by Rio Tinto, had expected the underground expansion to cost US$5.3 billion when it was approved in 2015. Last year, however, Turquoise Hill flagged stability risks associated with the original project design, adding that amendments to it could increase costs by as much as an additional US$1.9 billion. Turquoise Hill also warned at the time of further delays of up to two and a half years, with first sustainable production from Oyu Tolgoi’s underground expansion expected between May 2022 and June 2023.
Rio Tinto had said in September it planned to raise up to US$500 million through additional lending to develop the giant copper mine. The move, Rio said, would reduce the remaining funding requirement of the expansion to up to $1.4 billion. By reprofiling, the parties sought more time to repay their debt, knowing that the principal of the extended debt, or in some cases even the interest rate on it, are not reduced. Any remaining funding for the underground mine, Rio Tinto vowed, was to be met through a Turquoise Hill equity offering.
Turquoise Hill continues evaluating financing options for Oyu Tolgoi. Such alternatives include additional debt from banks or international financial institutions, an offering of global medium-term notes and a gold streaming transaction, it said. The company had previously disclosed it was facing a funding shortfall for Oyu Tolgoi’s expansion of up to $4 billion, including balance sheet servicing costs. Once completed, the underground section of Oyu Tolgoi will lift production from 125,000–150,000 tonnes in 2019 to 560,000 tonnes at peak output, which is now expected by 2025 at the earliest. This would make it the biggest new copper mine to come on stream in several years.
Oyu Tolgoi, located in the South Gobi desert near the border with China, produced 35,203 tonnes of copper and 26,154 ounces of gold in the first three months of this year. Rio Tinto owns the mine through its majority stake in Turquoise Hill, which has a 66% interest in Oyu Tolgoi. The Mongolian state has the remaining 34% of the operation. Turquoise Hill’s move comes a week after Rio Tinto’s new chief executive officer, Jakob Stausholm, overhauled the senior leadership team and created two new roles, as he seeks to repair damage to the company’s reputation stemming from last year’s destruction of a 46,000-year-old sacred Aboriginal site in Australia.
Source: northernminer.com
Latest Posts
- Serbia, The real plans of the Jadar project
- Eurasian Resources Group highly commends the publication of the Critical Raw Materials Act
- Rio Tinto has spent more than a million euros on land in Serbia at the proposed site of a lithium mine that was eventually cancelled a year ago
- A new grievance mechanism for Chinese overseas mining needs to be free to use
- Europe revives mining to reduce dependence on the import of key raw materials, supply from Serbia as competitive choice
Popular Post
- Serbia, The real plans of the Jadar project
- Avala Resources shareholders invited to approve transaction with Dundee, copper-gold projects in Serbia
- Europe revives mining to reduce dependence on the import of key raw materials, supply from Serbia as competitive choice
- Canadian mining companies in Europe & ISDS
- Rosia Montana in Romania, UNESCO protection and value of civic action
- What Are The Major Natural Resources Of Macedonia?
- Gazprom-OMV deal exclude Romania OMV refinery
- Gold mining project in Northern Ireland threatens livelihood of communities
- Zidjin opens the “Chukaru Peki” mine in Serbia in the next two years
- Lithium extraction in Europe