Thursday, March 20, 2014

Mongolia says seeks to end Oyu Tolgoi impasse at parliament session

* Mongolia looks to resolution over Oyu Tolgoi dispute
* Official says will be a topic when parliament session starts April 5
* Deadline for key financing expires March 31

(Adds details)

SYDNEY, March 20 (Reuters) - Mongolia will seek to resolve an impasse with mining group Rio Tinto over the $6 billion Oyu Tolgoi copper and gold project during a parliamentary session starting next month, a senior government official said on Thursday

The three-month session begins on April 5, five days after Rio Tinto has warned that lender commitments on existing project finance arrangements expire.

"It will all come together then," Mongolia's Minister for Foreign Affairs Bold Luvsanvandan said in Sydney, when asked if the impasse was slated for discussion during the session.

Rio Tinto did not immediately respond to requests for comment.

The company has warned the finance agreement is due to expire March 31, after having been extended last year by lenders, which include International Finance Corp and European Bank for Reconstruction and Development.

A major hurdle to getting Mongolia's largest foreign investment project back on track has been $4 billion in financing

There is also disagreement over compensation for cost overruns from an earlier stage of development.

Rio Tinto booked a $1.49 billion writedown post-tax on Oyu Tolgoi in its 2013 results, largely due to the delay in expanding the mine underground.

It has also warned investors to brace for a further $800 million writedown unless development work resumes after being halted in August.

Rio Tinto holds majority control of Oyu Tolgoi via its 50.8 percent interest in Canada's Turquoise Hill , which in turns owns 66 percent of Oyu Tolgoi. The Mongolian government holds the remaining 34 percent stake.

The Parliamentary session is scheduled to run from April 5 to early July, according to the minister.

(Reporting by James Regan; Editing by Ed Davies)

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